Turkiye: Imported scrap market witnesses moderate trade flow as currency concerns weigh

Turkish imported scrap prices have shown volatility this week, with moderate deals reported from various regions such as the UK/Europe, the US, and the Baltic. Meanwhile, market participants expect limited activity until an interest rate announcement by the country's central bank on 22 June'23.

In an effort to stabilise the Turkish lira, which has experienced substantial depreciation in recent weeks, the Turkish Central Bank is expected to announce a significant increase in interest rates on 22 June. This record-low exchange rate of 23.67 lira against the US dollar has led to higher export prices for finished steel products by Turkish steelmakers.

Turkish producers are primarily focused on the finished steel market. Participants anticipate that importers will prefer purchasing from US suppliers, leading to some short-term price stability. However, the volatility of the Turkish lira has the potential to temporarily impact domestic demand for rebar, consequently affecting deep-sea scrap purchases until the currency stabilises at a new level.

Recent deals

SteelMint's daily assessment for HMS 1&2 (80:20) from the US stood at $387/t CFR Turkiye, down $2/t w-o-w.

Domestic market scenario

Business activity improved in the local market as customers were in a hurry to book available volumes.

April construction cost index high: The construction segment in Turkiye continues to face challenges due to economic headwinds and rising production costs. In April, Turkiye's construction cost index increased by 52.99% on an annualised basis, with building materials costs rising by 39.8% y-o-y and labour costs increasing by 102.72%.

Kardemir sells rebar at $635/t: Kardemir, a Turkish steel producer, recently sold more than 30,000 t of rebar at $635/t with a weekly increase of TRY 85/t and a decrease of $11/t in dollar terms. With high-tonnage sales driven by an aggressive pricing policy and advantageous payment terms offered in Turkish lira, export offers for rebar from Turkiye are pitched at $620-640/t FOB for July shipment, stable w-o-w.

Turkiye's automotive production gains 32% in May: Additionally, the Turkish automotive industry saw a 32% increase in production in May, with stronger domestic and overseas demand supporting this growth. Passenger car production gained 35.1%, coming to 90,739 units. Stronger domestic and overseas demand supported the pace of development in the Turkish auto segment.

Turkish billet market gains momentum: The Turkish billet market is also gaining momentum, with both local and foreign suppliers finding buyers for their products. However, foreign sellers have managed to secure more substantial billet deals by adopting an aggressive pricing approach, adding pressure on the local market. Some suppliers anticipate further price increases, while others insist on higher price levels. Turkish billet sellers are currently offering their products at $600-610/t exw, with prices largely stable over the week.

Outlook: The stability of the Turkish lira will play a crucial role in determining the direction of imported scrap prices. If the Turkish Central Bank's decision to increase interest rates on 22 June helps stabilise the currency, it could contribute to a more predictable and stable scrap market.