Turkiye: Imported scrap prices drop $6/t w-o-w amid negative steel market sentiment

The imported scrap market in Turkiye remains stagnant with no major bookings reported and a pessimistic outlook among industry participants. Turkish steel producers started the week without any fresh deep-sea import scrap bookings and are assessing the situation before committing to additional volumes. Negotiations in the ferrous scrap sector are reportedly moving slowly. Mills are striving to boost market activity by reducing rebar prices, although these efforts have yielded limited success. Producers are awaiting more favourable terms for scrap. Scrap collectors are refraining from setting firm offers, as they are uncertain about acceptable price levels.

Some market participants expressed a softer price sentiment, suggesting that desperate sellers might be willing to accept lower prices. Turkish mills are facing budget constraints, but suppliers are also reluctant to lower prices. Market activity remains slow both in the US and Europe.

SteelMint's assessment for HMS (80:20) bulk from the US fell to $360/t CFR Turkiye, a $6/t decline w-o-w.

In a recent development, A US-based supplier sold a cargo comprising HMS(80:20) at $355/t to a West Marmara-based mill on a CFR Turkiye basis.

A northern Europe-based supplier sold a cargo comprising HMS(80:20) at $348.5/t and Bonus scrap at $368.5/t to a Mediterranean-based steel mill on a CFR Turkiye basis.

A Turkish mill secured a deal for HMS (80:20) scrap from Romania at $335/t CFR. This was a shortsea deal.

On 16 October a Europe-origin supplier sold HMS(80:20) at $359/t to an Aegean region-based mill on a CFR Turkiye basis

The spread between rebar and scrap is substantial at $195-205/t as FOB prices of rebar remain uncertain due to a recent deal at $545/t to Germany for November shipment cargo.

Domestic market: Despite ongoing challenges in Turkiye's billet market, integrated steel producer Kardemir has enjoyed sufficient domestic demand due to competitive prices. Other local and foreign suppliers have held their offers steady. Kardemir recently announced a new round of billet sales to the local market, with a $12-17/t reduction compared to the previous sales campaign. Billets of S235JR and B420 grades (150x150 mm) can now be purchased at $520/t and $525/t exw, respectively. These more competitive prices have enabled the company to secure orders for approximately 40,000 t within a single working day. Other mills have maintained their offers for billets in the range of $520-530/t exw for October delivery.

The market is subdued, with Kardemir being the sole company reporting sales. In the import segment, billet offers have remained unchanged, with semis from the Black Sea basin available at $500-505/t CFR for November shipment. Turkish billet suppliers are currently offering at $500-510/t exw for October shipment compared to $520-530/t exw a week back.

Sluggish demand for rebar has compelled local producers to announce another price reduction. Pessimism prevails and major long steel producer, ICDAS, recently announced a $20/t reduction in quotes for domestic rebar. Prices of domestic rebar from other Turkish steelmakers declined by $5/t since the end of the previous week. Consequently, the product is now available to local customers at $555-580/t exw, depending on the region. Reportedly, some volumes were sold at $550/t exw in the Izmir region, signalling a weak market. Mills are actively seeking ways to lower imported scrap prices as a means to reduce costs.

Auto sector: Turkiye's auto production witnessed a slight uptick in September, further widening the year-to-date disparity with 2022 figures. Local producers primarily concentrated on meeting domestic demand, while the influx of foreign products raised concerns. Turkiye's auto production increased by 1.3% y-o-y reaching 130,545 units in September. This increase was predominantly driven by a 17.7% surge in passenger car output, totaling 87,902 units.

Real estate sector: Reduced interest in mortgage sales, coupled with high inflation and the absence of economic stimulus, has contributed to the decline in the real estate sector. House sales in the country declined by 9.5% y-o-y to 102,656 units in September. Istanbul accounted for the largest share at 14.9% followed by Ankara and Izmir.

Outlook: Turkish mills are expected to refrain from buying scrap due to uncertain steel market trends and a pessimistic outlook which is casting a shadow on the market. Prices from the US may remain firm whereas European sellers are likely to reduce their offers or look to channel cargoes to alternate destinations in South Asia.