Turkiye: Imported scrap prices drop by $3/t w-o-w; buyers hesitant amidst firm offers

The Turkish imported ferrous scrap market experienced limited transactions with varying price trends throughout the week. In the present market scenario, Turkish mills demonstrate hesitancy in engaging with overseas scrap suppliers, and likewise, scrap collectors adopt a cautious stance, refraining from firm offers. Factors impacting the market evaluation encompass severe winter weather conditions, fluctuations in the dollar-euro exchange rate, and developments in the Red Sea.

Sell-side sources emphasise constrained scrap availability in both Europe and the US. American suppliers encounter difficulties attributed to a shortage of collection, resulting in offers for US-origin HMS (80:20) at $427-429/t CFR. Baltic sellers exercise caution due to severe winter conditions, with recent HMS collection costs in the Baltic region reported at Euro 345/t delivered to docks.

Buy-side sources reject concerns about scrap availability, considering them as sell-side rhetoric. They foresee the potential softening of scrap prices influenced by mill pressure and the recent devaluation of the euro against the dollar. A Turkey-based mill proposes a viable range of $420-425/t CFR for premium HMS (80:20), underscoring mills' unwillingness to embrace higher prices.

SteelMint's assessment for the US-origin bulk HMS (80:20) declined by $3/t w-o-w, reaching $422/t CFR Turkiye.

The scrap-to-rebar spread was assessed at $190-195/t as export offers for rebar hovered at $610-615/t on a FOB basis.

Even with the euro devaluation, a recycler based in the EU underscores supply concerns, asserting that possessing material is crucial to capitalizing on currency fluctuations. The recycler discloses HMS collection costs in the Benelux region at Euro 345-348/t delivered to docks on 17 January. Another recycler offers a lower estimate at Euro 335-340/t delivered to docks, indicating a Euro 5/t increase compared to the previous week.

Recent deals

• A Europe-origin deal was confirmed at $418/t CFR for HMS (80:20) and $443/t CFR for both shredded and bonus scrap.
  
  
• A US-origin cargo was sold to a West Marmara mill comprising 25,000 t HMS(95:5) at $430/t and 25,000 t shredded at $442/t CFR.
  
  
• A US-origin cargo was sold to a West Black Sea-based mill with 50,000 t mixed scrap at an average price of $440/t CFR Turkiye.
  
  
• A short-sea deal from France included 5,000 t of HMS (85:15), was booked by a Mediterranean region mill.
  
  

Domestic scrap market: The domestic scrap segment in Turkey continues to show strength, as major steel producers announce another round of increased purchase prices for local scrap this week. The ongoing growth in prices is attributed to currency devaluation, stable import scrap prices, and the steelmakers' efforts to secure local scrap amid slow rebar sales. Turkish steel mills raised lira-based purchase prices for local scrap by TRY 200-225/t, with the US dollar equivalent increasing by $7/t. Despite numerous economic challenges, some Turkish steel mills have opted to keep their domestic scrap prices unchanged.

According to a source, mills are eager to lower prices, given the difficulties they face in selling sufficient long steel tonnages domestically.

Billet Market: Amid a period characterised by limited business activity, foreign sellers of semi-finished products successfully managed to secure significant volumes in the Turkish import billet segment. Attractive sources included Southeast Asia and Algeria, while the local market saw fewer offers following the completion of Kardemir's sales campaign. The Russian billet for February shipment retained its price at $550/t CFR Turkish Black Sea, which was deemed acceptable by Turkish customers. Turkish billet suppliers made efforts in local sales at $590-600/t EXW, compared to $580-590/t EXW the previous week. However, these levels were considered challenging in light of rebar pricing. In the export segment, Turkish billet was assessed at $595/t FOB, maintaining stability from the preceding week.

Wire rod market in November: In November, Turkiye experienced positive dynamics in wire rod trade, with both exports and imports seeing growth. Europe became the primary partner, but despite the positive trends, Turkish exports remained below the levels of the same period in 2022. Imports more than doubled, indicating a shift in trade dynamics. Local wire rod producers increased overseas shipments by 68% y-o-y to 92,703 t. Whereas, imports of wire rod products increased by 11% y-o-y in November.

Turkish Car Industry CY'23: In 2023, the Turkish automotive industry demonstrated resilience amid economic challenges, achieving a robust 8.6% y-o-y increase by producing 1.47 million vehicles. The local market experienced significant growth of 55%, driven by strong commercial performance, while passenger car sales surged by 63%. Exports rebounded by 5%, further contributing to the industry's positive performance. However, concerns for 2024 have emerged due to economic headwinds, escalating vehicle prices, credit challenges, and the potential contraction of the market by 30-35%. The industry's trajectory is expected to be influenced by the upcoming spring elections.

Outlook: According to market insiders, Turkish mills have initiated inquiries for March shipments, prompting some sellers to adopt a cautious stance to ensure imported ferrous scrap prices remain stable or soften in the near term.