Turkiye: Imported scrap offers drop amid negative sentiments

Turkiye's imported scrap trade improved after a lull as prices came down sharply. Around 4-5 deep-sea bulk cargoes are heard to have been booked this week at low prices. However, the sentiment is still negative owing to the fact that the finished steel market yet to improve. Meanwhile, steel mills remained cautious due to increased production costs.

SteelMint's assessment for US-origin HMS 1&2 (80:20) stood at $370-375/t CFR, moving down significantly by around $30/t w-o-w.

Imported scrap prices are likely to come under pressure as Turkish authorities raised power and natural gas prices for households and industrial use which could lead to production curtailment, sources reported. High energy costs and steel production cuts have weighed on bids for imported scrap.

Recent confirmed deals

• A US-origin bulk cargo, comprising HMS (80:20), was booked by a west Marmara-based steel mill at $373/t CFR.
  
  
• A Europe-origin bulk cargo, comprising HMS (80:20), was booked by a West Marmara-based steel mill at $372/t CFR.
  
  
• Furthermore, a West Marmara-based steel mill booked Baltic-origin cargo comprising 34,000 t of HMS (80:20), 6,000 t of bonus scrap, and 12,000 t of shredded. The material was booked at an average price of $374/t, CFR Turkey for the mid-October, 2022 shipment.
  
  
• On the other hand, a cargo comprising HMS 1&2 (80:20) was booked at $386/t CFR Turkiye by an Aegean region-based mill towards last weekend.
  
  

Suppliers are waiting for buyers' response to the currently offered prices. However, the prices have come down significantly in the last couple of days.

Ferrous scrap imports fall 15% m-o-m in July: Turkiye's ferrous scrap imports declined by 14% to 1.37 million tonnes (mnt) in July 2022 compared to 1.59 mnt last month, as per customs data. The absence of buyers in the market due to weak finished and semi-finished steel demand kept imported scrap offers under pressure. A few mills postponed fresh bookings, trying to secure further discounts. Similarly, on a yearly basis, scrap imports decreased by 41% compared to 2.34 mnt in July 2021.

Factors impacting imported scrap market

• Lira largely stable against dollar: The Turkish currency, Lira, remained largely stable this week. The currency is now being traded at 18.23.
  
  
• Turkiye raises electricity, gas prices: Turkish authorities have raised electricity and natural gas prices for households by around 20% and by around 50% for industry, putting further upward pressure on inflation. Higher industrial prices also led to an indirect increase in inflation as producers reflect on the costs on consumers.
  
  
• Rebar market witnesses activities: Despite extremely weak buying interest, steel producers have kept their prices unchanged amid high costs. However, the market witnessed a few trade activities. The country's long steel producer, ICDAS, set its rebar offers at $710/t exw-Biga and $721/t CFR Marmara. Rebar offers from other suppliers also remained unchanged in the range of $700-710/t exw, depending on the region. However, the workable price remains at a low level.
  
  
• Auto sales stay depressed in August: The Turkish automotive sector, one of the major steel-consuming areas in the country, stayed under the pressure of economic fluctuations, which further heated up the already high prices. Turkiye registered a 17.3% y-o-y drop in passenger car and light commercial vehicle sales at 48,336 units in August, according to the local Automotive Distributors' Association (ODD).
  
  

Outlook: Imported scrap prices are likely to fall further, owing to less interest from steel mills due to negative market sentiments and increased gas and electricity prices.