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Turkiye: Imported ferrous scrap prices remain largely stable w-o-w; market expects pre-Eid restocking

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Melting Scrap

BigMint Bureau

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6 Jun 2024, 20:23 IST

Turkiye: Imported ferrous scrap prices remain largely stable w-o-w; market expects pre-Eid restocking

Strong demand from mills ahead of holidays to sustains prices

Europe maintains firm prices for premium grades on tight availability

Mills secure 30-plus bulk vessels for late June, early July shipments

Turkiye's import scrap prices remained largely stable as mills are relatively interested in the current price ranges. Despite a strong restocking in late May, Turkish mills continued inquiring. This demand is attributed to an upcoming holiday in mid-June, which may limit market activity. Market participants expect prices to remain range-bound as there is equilibrium in the short-sea space. Mills cannot raise prices, and suppliers cannot lower either. This translates into a stalemate with minor fluctuations.

Turkish steel producers began their deep-sea bookings last week to replenish July stocks and are expected to continue in the short term. The demand for finished long steel products in domestic and export markets is expected to drive scrap purchases.

Scrap suppliers are reluctant to provide further discounts due to the sluggish material flow to their yards. An industry source mentioned that a UK scrap collector temporarily increased dockside prices for a week, but this hike did not translate into increased sales.

In May, Turkish steelmakers returned to imported scrap to restock after a slow April. Turkish producers booked over 30 deep-sea cargoes comprising 1 to 1.1 mnt scrap, higher than April bulk bookings, mostly for June shipments with some for July.

BigMint's assessment for US-origin HMS (80:20) bulk scrap stood at $380/t CFR and remained largely stable with a mere $1/t uptick w-o-w.

BigMint's assessment for bulk HMS (80:20) from the US east coast stood at $358/t FOB, slightly up by $2/t w-o-w.

Turkish rebar export prices stood at $578-580/t FOB. The scrap-to-rebar spread was assessed at $198-200/t FOB, narrowed down as compared to last week.

The first half of May was quiet as mills delayed purchases due to weak rebar sales. Scrap collectors increased dockside prices to boost supply. In the latter half, importers accelerated purchases to restock for June, securing discounts. Monthly average prices of HMS (80:20) from the US East Coast dropped by $5/t to $381/t CFR Turkiye in May. Prices stabilised after a slight drop, with mills facing tight margins and low demand. Early June was quiet, but trade is expected to resume as steelmakers need to restock before the Eid al-Adha holiday, requiring July shipment volumes to be booked in advance.

European sell-side sentiments remained firm as exporters noted limited scrap availability at docks. Domestic mills are demanding premium grades, stabilising prices for EU-origin HMS (80:20). Prices are expected to remain steady at $374-378/t CFR due to weak inflows and cautious market conditions. Recent declines in iron ore prices are expected to exert pressure on Turkish imported scrap prices in the short term, reflecting subdued market fundamentals.

Recent deals:

US-origin bulk HMS (80:20) and shredded were booked at $380/t and $400/t respectively by an Aegean region-based mill, CFR Turkiye.

EU-origin bulk HMS (80:20) cargo was booked at $372/t by an East Marmara-based mill.

Europe-origin bulk cargo of 24,000 t of HMS (80:20) was booked by a West Marmara-based mill at $372.5/t and 6,000 t of shredded and 10,000 t of PNS at $396/t each.

A Russian supplier sold bulk HMS(80:20) at $372.5/t to an Aegean region-based mill.

A US-origin supplier sold bulk HMS (95:5) at $385/t and shredded at $399/t to a Mediterranean region-based mill.

A Baltic origin supplier sold a bulk cargo of HMS (80:20) to an Aegean region-based mill.

Turkiye's automotive sector, a major steel consumer, saw a significant m-o-m increase in May sales despite a y-o-y decline. In May, sales of passenger cars and light commercial vehicles reached 100,305 units, a 32.1% increase compared to April.

Compared to May 2023, sales dropped by 10.1%. Passenger car sales fell by 8.2% to 80,260 units, while light commercial vehicle sales decreased by 17% to 20,045 units. Despite the yearly decline, May 2024 sales were 45.7% higher than the average sales for May over the past decade, indicating a strong performance.

Outlook

Turkish mills expect scrap prices to remain stable, but under pressure, at around $380/t CFR. US weak domestic buy sentiments may lead to lower obsolete scrap prices, potentially influencing softer export offers from the US. Sellers face challenges in pushing prices above current levels due to iron ore price impacts, suggesting a sideways trend with minimal fluctuations expected in the near future.