Turkiye: Imported ferrous scrap prices rise $4/t as mills return to market for July shipments

The Turkish imported ferrous scrap market witnessed active bookings towards the last week of June as Turkish producers came back to the market to secure scrap for July shipments.

As per suppliers, during the 10-day holiday period, Turkiye refrained from deals. However, with mills still requiring over 8-10 scrap cargoes for July shipments, they promptly returned to the market.

While scrap prices increased, Turkish rebar prices in both the domestic and export markets softened due to weak demand, dampening hopes of a strong recovery in imported scrap prices.

As per a few steelmakers, scrap suppliers raised their prices due to higher freight rates. The main reason for the upward trend is the $4-5/t increase in freight costs, coupled with weak material flow to the yard. The target price for US-origin HMS (80:20) is around $393/t CFR.

As per market participants, scrap prices are not going to soften due to increased freight costs and there is no chance for a price drop from this point onwards.

The sustainability of this uptrend will be tested as Turkish steelmakers negotiate for August shipments. Currently, mills have resisted the $390/t CFR mark for premium HMS (80:20), despite pressure to secure July shipments.

Recent deep-sea deals:

• Baltic supplier to Mediterranean mill: HMS (80:20) at $388.5/t CFR Turkiye.
  
  
• Northern European supplier to Aegean mill: HMS (80:20) at $387.5/t CFR Turkiye.
  
  
• US supplier to Aegean mill: HMS (80:20) at $389/t CFR Turkiye.
  
  
• Two UK-origin HMS (80:20) bulk scrap cargoes at $385/t CFR Turkiye.
  
  
• A Holland-based HMS (80:20) cargo at $384/t CFR Turkiye.
  
  

Short-sea deal scenario: Turkish mills, facing a supply shortage recently concluded a short-sea deal with Greece at $380/t for an HMS (85:15) mix. Greek material, often purchased out of necessity despite its lower quality, has supported the higher price for the latest US East Coast export deal. Some mills are now turning to short-sea scrap at $365-368/t CFR for material from Romania and Bulgaria.

Assessment trends:

• BigMint's assessment for US-origin HMS (80:20) bulk scrap stood at $390/t CFR, an increase of $4/t w-o-w.
  
  
• BigMint's assessment for bulk HMS (80:20) from the US East Coast stood at $363/t FOB, up $5/t w-o-w.
  
  

The scrap-to-rebar spread was assessed at $190-192/t FOB, narrower compared to last week.

Turkish steelmakers were expected to reserve more material for July but showed less interest due to recent billet imports. In recent weeks, they booked billets from China, Indonesia, and Bahrain at around $530-540/t CFR.

Domestic rebar update: Kardemir increased its domestic rebar prices to TRY 23,346/t ($708/t)/t ex-works, including 20% VAT, up TRY 246/t from the previous price announced on 6 June. Despite this increase, Turkiye's domestic rebar prices slightly decreased in late June due to weak market activity. Kardemir managed to sell up to 20,000 t at TRY 23,346/t exw, though the equivalent dollar price dropped to $590/t exw due to the weakening of the national currency.

Long steel prices in the local market slightly increased amid a marginal downturn in the Turkish lira's value. Turkish mills buy most of their raw materials in US dollars and sell their finished long steel products in lira; so domestic prices for long steel products tend to rise with a stronger dollar.

Other Turkish suppliers saw their rebar offers drop $5/t compared to pre-Eid al-Adha levels, now ranging from $585-615/t EXW, depending on the region.

Export rebar offers for July shipment have remained stable at $570-580/t FOB since mid-June, but sales have been limited. The market is flat; nothing has changed as per sources. Turkish wire rods are available for exports at $590-600/t FOB for July shipment.

Scrap, a strategic metal?

Turkiye, the world's largest ferrous scrap importer, is considering declaring scrap a strategic sector, driven by a Green Deal report. With over 20 million t/year imported, the focus is on scrap management, quality, and certification amid a shift to low-carbon steel production. Strategies include hydrogen use in furnaces, increasing DRI usage, and enhancing renewable energy. Carbon pricing plans, including a pilot ETS in Q4 2024 and full implementation by 2027, aim for significant emissions reductions. The steel industry targets a 99.7% cut by 2053; aluminum aims for 75%. EU's Carbon Border Adjustment Mechanism (CBAM) has spurred Turkish steelmakers to invest heavily in low-carbon technologies.

Outlook: Sources indicated multiple cargoes might be booked later this week with the suppliers' target price for HMS (80:20) at $390-392/t CFR, but Turkish buyers will be bidding around $384-386/t CFR. Sentiments are likely to be at the upper end of that range due to current market conditions.