Turkiye: Imported ferrous scrap prices rise by $2/t w-o-w; suppliers remain firm amid high collection cost
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In early July, mills purchased scrap mainly to sustain continuous production, avoiding large stockpiles due to limited rebar sales. Scrap suppliers maintained upward price pressure due to slow collection and high port-side quotes, with freights rising by $4-5/t, further affecting prices.
According to market insiders, sellers in Europe are facing high collection costs, while Turkish mills are struggling with firm input costs, leading to mixed price expectations. European recyclers reported high collection costs, which led them to maintain firm export offers. The tight supply in Europe and the US is contrasting with the slow demand from Turkish mills, and resulting in US-origin scrap prices being slightly higher than their European counterparts due to the collection cost differential.
Overall, imported bulk scrap offers from the US rose by $3-4/t w-o-w as per market survey.
Eid holiday effect: In the last week of June, buying activity surged as mills needed to secure more lots for July shipment, post-which imported HMS (80:20) bulk scrap prices from the US witnessed a range-bound trend, and stood at $390-392/t, increasing by $2-3/t w-o-w. Limited working days in June due to the Eid holidays led to a significant drop in deep-sea import scrap bookings.
Despite this, scrap prices increased due to enhanced mill buying activity at the end of the month, firm supplier positions, and higher freights. Turkish buyers purchased around 0.6-0.7 mnt of ferrous scrap in June, mostly for July shipments, which had been booked before and after the mid-June holiday period which is almost 0.5 mnt less than in May 2024.
Mixed near-term price trends: Some participants foresee an increase in prices due to tight supply, while others predict a slight softening due to lower demand from Turkish mills. This reduced demand is partly due to recent billet bookings from East Asia and Algeria.
Assessment trends:
- BigMint's assessment for US-origin HMS (80:20) bulk scrap stood at $390/t CFR, an increase of $2/t w-o-w.
- BigMint's assessment for bulk HMS (80:20) from the US East Coast stood at $364/t FOB, up $3/t w-o-w.
The scrap-to-rebar spread was assessed at $188-190/t FOB, stable compared to last week.
Recent deals:
- A UK-origin bulk scrap cargo was booked by a West Black Sea region-based mill comprising HMS (80:20) at $387/t CFR Turkiye.
- A US-origin bulk scrap cargo was booked by a Mediterranean region-based mill, comprising HMS (95:5) and shredded at $395/t and $407.5/t CFR Turkiye.
- Another US-origin bulk scrap cargo was booked by an East Marmara region-based mill comprising HMS (80:20) and shredded at $390/t and $410/t CFR Turkiye.
- A Mediterranean mill booked a US-origin bulk scrap cargo consisting of 15,000 t of HMS (90:10) at $395/t, 10,000 t of Shredded at $410/t, and 5,000 t of PNS scrap at $410/t, all on a CFR Turkiye basis.
- The same US supplier also sold another bulk cargo to the same mill, comprising HMS (80:20) at $390/t and Shredded at $410/t CFR Turkiye.
Erdemir's solar investment: Erdemir, part of the OYAK Mining Metallurgy Group, is investing TRY 4.95 billion ($150 million) in a solar power plant in Malatya province. Construction starts in August 2024 and is expected to complete in 24 months. The plant, covering 361.5 hectares, will have a 312 MWm capacity with 567,270 solar panels. Erdemir also plans six solar power plants in Van province, costing TRY 1.87 billion ($56.7 million).
Wire rod imports tariff: Turkiye has imposed a $175/t tariff on foreign wire rod imports until 2027 to protect its steel industry. Effective from 15 June 2024, the tariff will be reduced by $5/t annually. Developing countries are exempt from this duty but have a shipment quota of 33,898 t until January 6, 2025. Turkiye's wire rod imports surged to 718,000 t in 2023, prompting the investigation and subsequent measures. Local wire rod imports dropped by 45.8% y-o-y in 2024.
Auto sales: The Turkish auto market saw a 3.7% y-o-y increase in H1 2024, with sales reaching 577,981 units. Passenger car sales rose 7.3% to 462,955 units, while light commercial vehicle sales fell 8.7% to 115,026 units. Electric vehicle sales surged to 8.5% of total sales, up from 3.3% in H1, 2023. June sales fell 5.3% y-o-y to 106,238 units. Imported vehicle sales rose 16.1% y-o-y to 400,390 units in H1, 2024, while local car sales dropped 16.5% to 177,591 units.
Outlook
Early July saw stable prices with several fresh sales. However, negotiations were slow as mills had secured their immediate needs. Prices are expected to remain stable or rise slightly due to lower material flow to yards during the summer holiday and continued weak demand in the finished steel segment.
