Turkiye: Imported ferrous scrap prices drop $6/t w-o-w amid weak downstream sentiments
...
Turkish deep-sea imported ferrous scrap prices dipped slightly amid sluggish rebar sales, enabling mills to push sellers for lower prices. The stagnation in the finished steel segment has influenced expectations related to scrap prices.
Although Turkish scrap customers are hesitant due to subdued steel market conditions, their price expectations remain discordant with suppliers' offers, resulting in limited transactions. This cautious sentiment was mirrored by unchanged price assessments at the beginning of the week, highlighted the prevailing cautious stance in the market.
Weak rebar sales made buyers cautious about importing scrap. Turkish mills aimed for lower prices, with an indicative bid for US-origin HMS (80:20) at $400/t CFR.
BigMint's assessment for US-origin HMS (80:20) bulk scrap stood at $411/t CFR, down $6/t from the last week. EU/UK-origin HMS (80:20) tradable levels were heard at $405-$407/t CFR, while Baltic-origin HMS (80:20) ranged from below $408-410/t CFR to up to $410-412/t CFR, mostly softer.
The Turkish rebar export prices remain slightly down to $608/t FOB, and buyers sought lower scrap prices, indicating a potential drop to $400-$405/t CFR.
The scrap-to-rebar spread was evaluated at $195-197/t, considering that Turkish exported rebar was assessed at $605-608/t FOB Iskenderun.
According to steel mill representative,"Scrap prices are declining, and collection rates in the US are also elevated. Suppliers are raising their offers, but buyers, including us, have lost interest. Unless prices drop below the $400/t mark, buyers are unlikely to react, and booking interest is expected to continue downward this week."
If we consider seller/recycler-side sentiments, market sources suggest limited downside potential in scrap prices. Mills may need to restock soon, and sellers in some regions face competition for scrap collection. Another source notes that Turkish mills still require 7-8 more cargoes for March, potentially supporting prices around $410/t CFR.
Additionally, ongoing high collection costs indicate resistance to further price declines. European recyclers noted collection costs in the Benelux region above $340/t delivered, suggesting possible losses at prices below $408-410/t CFR for EU-origin material.
The recent Euro appreciation against the dollar hindered the ability to offer lower prices, potentially leading to losses for sellers. A minimum workable value for US material was $412-415/t CFR last week amid buy-side pressure, but this week looks more downward.
Recent deals:
Domestic market:
Turkish steel producers are lowering rebar prices for domestic clients due to weak demand. Offers have decreased by $5-10/t since last week, ranging from $615-630/t exw, with the lower end seen as more realistic. Poor buying interest and reduced import scrap prices have prompted the price cuts.
Turkish steel production and exports faced challenges due to global and domestic factors, leading to a decline in recent years. Despite various measures to protect the domestic market, including import duties and potential anti-dumping measures, experts foresee improvement in the Turkish steel market in 2024, driven by global steel demand growth, lower interest rates, and increased domestic consumption.
Billet suppliers were present in the Turkish steel market occasionally, with weak demand and potential price drops anticipated. While export quotes remained close to domestic levels, competitors from other countries offered cheaper semis.
Turkiye increased purchases of metallics last year, with growth seen in both the pig iron and HBI/DRI segments. Russia remained the main supplier of pig iron, while the US emerged as a key source of HBI.
Consumer Confidence Index: Turkiye's consumer confidence declined in February 2024, ending the upward trend of previous months. February's seasonally adjusted consumer confidence index decreased by 1.3% compared to January 2024 and slid by 3.9% y-o-y, reaching 79.3 points, according to the Turkish Statistical Institute (TUIK).
Citizens refrained from significant expenses, impacting steel-consuming sectors like construction and automotive. While some indicators showed positive dynamics, they were insufficient to drive radical changes in these segments.
Continued currency fluctuations and overall economic headwinds contributed to weak consumer confidence. The lira slumped y-o-y, and inflation figures in January reached 64.86%, adding 6.7 p.p. m-o-m, according to the Central Bank of the Republic of Turkiye.
Short-term outlook: Anticipation of a drop to $405/t CFR next week looms if unsold cargoes persist till the second half of March. As per sources, low trading activity is expected primarily due to economic challenges like the lira devaluation and upcoming elections.
