Turkiye: Imported ferrous scrap prices slump $18/t w-o-w; buyers reluctant amid depreciating Lira

Turkish deep-sea imported ferrous scrap prices slumped w-o-w. This drop came as a reported deal from the US reinforced reduced mill targets. Financial issues in Turkiye have led to almost no interest in short-sea cargoes, and mills are being reluctant to book scrap from certain suppliers due to depreciating currency exchange rate.

The impact of this situation also extends to the EU and USA markets. European suppliers are finding it challenging to maintain profitable price levels due to raw material shortages, a stronger Euro, and low collection rates.

SteelMint's price assessment for US-origin bulk HMS (80:20) scrap stood at $355/t CFR Turkiye, down sharply by $18/t w-o-w

Recent deals

A few low-priced deals were heard this week from the US, the UK, and Baltic region.

• A West Marmara mill booked a cargo containing HMS (80:20), and shredded-bonus scrap at $355/t and $375/t CFR Turkiye respectively. The shipment is for late-August.
  
  
• In another UK-origin deal, a Mediterranean-based mill booked a cargo containing 30,000 t of material including HMS (80:20) and shredded-bonus scrap at $362/t and $387/t CFR respectively. The shipment is scheduled to be delivered in the first half of August.
  
  
• In another Baltic-origin deal, an east Marmara-based mill booked a cargo containing HMS (80:20) and bonus scrap at $355/t and $375/t CFR Turkiye respectively.
  
  

Domestic market update-

The Turkish currency lira touched a low level at around TRY 27 against the US dollar, leading to continued declines in domestic scrap prices. Despite maintaining their lira-denominated domestic scrap purchase list prices, Turkish steel mills' purchase prices fell when measured in dollars due to the lira's depreciation. Turkish mills consume about 30 mnt/year of steel scrap, with approximately a quarter being domestically sourced.

Domestic steel market overview

The semi-finished and finished steel markets in Turkiye are bearish due to lacklustre demand from both local and foreign customers. Domestic rebar offers decreased by $2-10/t since mid-week to stand in the range of $580-600/t exw currently, depending on the region. However, major Turkish steelmaker ICDAS has kept its rebar prices unchanged during the review period at $620/t exw-Biga and $635/t CFR Marmara. Subdued buying interest remains the primary reason for this downtrend.

Turkish flat steel producer MMK Metalurji, a subsidiary of Russia's MMK, recorded a sharp drop in crude steel production in H1 CY'23 amid unfavourable market conditions and forced downtime. The company produced approximately 135,000 t of crude steel in January-June 2023, a significant decline compared to the volumes recorded a year ago. This fall in production volume can be attributed to a decrease in business activity in Turkiye due to macroeconomic headwinds and the earthquake in February 2023.

Outlook

The outlook for the market is uncertain, with predictions of further tax increases and concerns about potential energy price hikes in August. A revival in demand may occur after the Central Bank of Turkiye announces new lending rates, but majority market players do not expect a major upturn. However, such a decision could accelerate the depreciation of the lira and hence could affect the buying rate of Turkish scrap buyers.