Turkiye: Imported ferrous scrap prices drop over $25/t w-o-w amid bearish sentiments

Imported ferrous scrap prices in Turkiye experienced a significant drop recently due to downward trends in supplier markets. Weak expectations for domestic settlements in the US and ongoing declines in European collection costs intensified the bearish sentiment, followed by uncertainty over the short term.

Last week, offers from the US to Turkiye were in the range of $395-400/tonne (t) but have been rapidly decreasing over the past seven to ten days. This decline is attributed to expectations of further decreases in March, influenced by falling US steel prices. Traders feel prices could drop to as low as around $370/t levels.

Initially, scrap collectors resisted lowering prices in February due to high dockside rates. However, as demand from other sources remained low, they eventually had to lower prices. While this situation was unprofitable for both sides, Turkish producers were able to negotiate lower prices to adapt to the market conditions.

BigMint's assessment for US-origin HMS (80:20) bulk scrap stood at $376/t CFR, sharply dropping by $25/t from last week.

BigMint's assessment for HMS (80:20) bulk from the US East Coast stood at $355/t FOB, down by $23/t w-o-w, followed by weaker domestic sentiments in the US scrap market.

HMS collection costs in the Benelux region dropped to Euro 300-302/t delivered to docks, down by Euro 8-10/t from the previous week, but availability at these prices was limited. No offers for Baltic-origin scrap were reported. EU traders suggest that sellers are now stepping out, indicating prices are close to the bottom.

In the short-sea market, deals for Romania-origin scrap ranged from $355 to $364/t CFR recently, with offers for Romania-origin material at $360/t CFR, which mills reportedly rejected.

EU recyclers received many inquiries from mills, signalling that the bottom price is approaching, and that mills want to buy at these low levels. Offers for EU-origin scrap were reported at $380/t CFR and higher, which mills found unworkable.

Recent market activities: A couple of bulk scrap deals were recently concluded from the US to a Turkish mill based in the Aegean and Mediterranean regions. HMS(80:20) was at $385/t while shredded and bonus scrap were at $405/t (each) followed by HMS (85:15) at $395.5/t and shredded scrap at $410.5/t. A Mediterranean region-based mill secured HMS (80:20) scrap at $376/t CFR Turkiye, along with bonus scraps at $396/t CFR from the US. Similarly, another mill in the Aegean region obtained HMS (80:20) at $377/t and bonus scrap at $398/t CFR from the US.

Rebar market: No new rebar exports were reported, and BigMint's weekly rebar assessment stood at $590/t FOB Iskenderun. The scrap-to-rebar spread has widened to $220-225/t as of now. Rebar producers in Turkiye are pessimistic about price trends globally. Some mills booked cargo when prices were higher and were reluctant to pay $378-380/t CFR Turkiye for scrap. Sellers find it challenging to adjust to the new level of around $370/t CFR Turkiye.

Turkish steel producer Izmir Demir Celik is selling its three cargo ships for $23 million. The move is to focus on steel production and meet long-term goals. The ships are sold to Sea Eagle, Sea Pearl, and Sea Diamond shipping companies. Established in 1975, Izmir Demir Celik produces steel for both local and global markets. It produces 1.5 million tonnes annually in its melt shop and has rolling mills with capacities for rebar and section steels at 900,000 t and 400,000 t respectively.

Outlook: Turkish mills may see a further $5/t drop in scrap prices unless they start selling rebar. Exporters might adjust their purchase levels based on new low sales, waiting to see if anyone will sell at that price. The question remains when the price floor will be reached.