Turkiye: Imported ferrous scrap prices rise $4/t w-o-w; steel demand moderate ahead of Eid

The Turkish imported ferrous scrap market witnessed a slight rise in prices w-o-w, reaffirmed by a recent US and UK origin deal. Market sources anticipate further deal activity throughout the week, reflecting sustained interest in the market.

"Two to three mills are still actively seeking cargoes, but there just aren't enough offers," noted an agent source. This supply-demand mismatch suggests that a European recycler could secure $383/t CFR for its material.

According to a market insider, despite higher prices, steelmakers are gearing up to restock approximately 15-20 vessels for July. Steel demand is anticipated to remain stable next month with a positive market sentiment. However, current sales of finished steel are sluggish. US recyclers, like those in Europe, are maintaining prices due to high collection costs and limited availability.

Supplier-side sentiment: Supplier sentiment in the US market reflects a growing pessimism towards finished steel and raw materials prices in June compared to May. According to European recycles, a weaker euro puts recyclers in a better position to pay more for their HMS at the docks.

Recyclers argue that recent payments in dollars by Turkish mills have strengthen their purchasing power at the docks. Furthermore, few suppliers informed that HMS collection costs might have risen to EUR 320/t delivered, though this hasn't been confirmed by other European recyclers.

Last week, European recyclers were offering at $383-384/t CFR and accepting at $380/t CFR. This week offers increased to $385-386/t CFR with expectations to accept around $384/t CFR, indicating potential price increases.

Recently, a West Marmara-based steel mill booked a US-origin cargo comprising HMS (90:10) at $386/t CFR Turkiye.

BigMint's assessment for US-origin HMS (80:20) bulk scrap stood at $384/t CFR increased by $4/t w-o-w.

Rebar updates: Turkish rebar export prices remained steady w-o-w, supported by robust scrap import prices into Turkiye. BigMint's weekly assessment of Turkish rebar exports stood at $580/t FOB. Sources noted that Turkish mills offer prices slightly higher than in previous weeks, driven by increased scrap import costs, with mills hesitant to accept bids below $580/t FOB as scrap prices exceed $380/t.

Despite rising Turkish rebar offer prices recently, global market demand remains subdued, keeping Turkish mills operating at about 60% capacity. The increase in prices reflects higher raw material costs and aims to maintain profitability above the $200/t scrap-rebar conversion spread. Scrap import prices into Turkiye remain at $194-196/t.

Kocaer, a major Turkish steel producer, maintained export volumes in Q1 2024 despite a two-month factory halt for upgrades. Sales of steel sections totaled 124,656 t, down 9.4% year-on-year. The company expanded its steel service center's capacity by 50% to 180,000 t/year in March, aiming to boost value-added steel production. With a total capacity of 800,000 t/year across three mills, Kocaer exports 84% of its output. It is also planning steel profile investments in the US and Saudi Arabia and aims to increase solar power capacity from 13 million to 45 million KWh to meet its energy needs.

Turkiye's construction industry remains pressured by rising costs, weak currency, and high inflation. The construction cost index surged 71.8% year-on-year in April 2024, driven by a 57.21% increase in building materials and a 109.73% rise in labor costs. Sequentially, costs rose 2.12%. The lira weakened 67.3% year-on-year, with inflation at 69.8%, further straining construction companies.

Outlook: As per a few Turkish mills, a bearish outlook might be there in the market for near-term prices, anticipating a slowdown in demand as Turkiye approaches the Eid al-Adha holiday period from 16-20 June. Scrap prices from Europe and the US are holding steady at $383-386/t and may see a modest increase by $3-4/t by next week. On the other hand, an expectation of reduced activity during the holiday period might temper the current demand for scrap. Overall the impending holiday and limited offers might influence price movements and demand in the near future.