Turkiye: Imported scrap prices drop $9/t w-o-w amid slow finished steel sector

The Turkish imported scrap market continued to face challenges, primarily due to unfavourable conditions in the finished steel sector. A combination of low demand within Turkiye's domestic and export markets, with a particular impact on the Middle East due to the Gaza conflict, has discouraged steelmakers from engaging in deep-sea scrap bookings. Scrap exporters are also adopting a cautious approach in establishing firm offers, as they seek to gauge the true market price. Presently, it is a market largely influenced by buyers, making it challenging for suppliers to maintain their preferred pricing.

As per a trader source,"The Turkish lira's depreciation against the US dollar has been less sharp, but a price recovery in Turkish scrap import prices is not expected soon."

As per market participants, Turkish mills purchased 38 deep-sea cargoes for the October shipment and are expected to buy a maximum of 25 deep-sea cargoes for the November shipment. Abundant incoming scrap stocks are pushing Turkish mills to seek lower prices. The current scrap-rebar spread stands at $195-200/t, close to the generally anticipated $200/t target by mills.

Turkish export rebar offers declined by $5-10/t, with the product available abroad at $545-560/t FOB for November shipment. Despite offering discounts, steel producers face challenges in boosting demand.

There are mixed opinions regarding the near-term outlook for the scrap market. Some suggest a bearish sentiment due to lower rebar sales by Turkish mills, while others anticipate a bullish outlook for premium HMS (80:20) scrap prices to recover by $5/t.

As per steelmakers, if there is a downward trend in rebar sales prices, scrap pricing should be lower. This approach is indicative of the close relationship between steel and scrap pricing.

Recent deals:

• Two shipments from the US were booked at $357/t and $358/t on a CFR Turkiye basis for Aegean and Marmara region-based mills.
  
  
• UK-origin cargo comprising HMS (80:20) and Bonus at $352/t and $372/t to a Black Sea region-based mill on a CFR Turkiye basis.
  
  
• A Denmark-origin seller sold a cargo comprising HMS(80:20) and bonus scrap at $351/t and $371/t to an East Marmara-based mill on a CFR basis.
  
  
• Last week, another Europe-based seller sold cargo with HMS (80:20) and bonus scrap at $347/t and $367/t to a Mediterranean region-based mill on a CFR basis.
  
  

Domestic market: Turkiye's steel producers kept suffering from sluggish long sales and were forced to decrease their quotes, but such a step could not spur the activity.

Turkiye's integrated steel producer, Kardemir, announced new rebar prices to the domestic market. The company's offers were adjusted downward by $27/t (TRY 535/t) and were set at $557/t (TRY 18,798/t) EXW. Despite the price discount, the producer managed to collect orders for only 20,000 t over the working day, closing the sales round.

The construction sector in Turkiye continues to face challenges, with shaky currency, economic headwinds, and high costs weighing on construction confidence. While there's a slight improvement in October, it remains nominal, and strong demand revival is elusive. The market's cautious optimism is reflected in sub-indices, with a slight gain in the order books index and employment expectations over the next three months.

The Turkish economy is experiencing certain revamps that have attracted foreign investors back to its markets. This has led to improved general economic expectations over the next 12 months, with a 7.2% m-o-m increase, reaching 72.9 points in October. However, despite these positive developments, inflation pressure remains high in Turkiye. The September consumer price index indicated a significant y-o-y increase of 61.53% and a monthly increase of 4.75%. This high inflation rate has created challenges for consumers, particularly in making significant expenditures. Due to the prevailing high inflation, potential buyers are postponing purchases of new cars and residential properties. This hesitance in consumer spending has created headwinds for local steel suppliers. The key consuming sector is experiencing insufficient demand as a result.

Outlook: A price recovery in Turkish scrap import prices is there in the near future. A combination of weak Turkish and Indian demand is measured to outweigh the slow flow of scrap in all exporting regions. In the very short term, the Turkish market is expected to remain range-bound with certain changes up to a $5/t hike in further activities.