Turkiye: Imported scrap prices witness $10/t drop w-o-w amidst frequent low-priced deals from US and Europe

Turkish steelmakers continue gradual restocking with imported scrap at lower prices amid negative sentiment in the domestic steel market. Negotiations in the ferrous scrap segment have been sluggish, as Turkish mills are focused on the longs market as the finished steel market remains problematic, with low demand and reluctance to purchase, further hindering improvement in the scrap sector.

Additionally, the expectation of hikes in energy prices from August onwards is putting further pressure on Turkish mills.

On the supply side, European suppliers are facing their own set of challenges, including weak supply due to holidays and hot weather conditions. This has made it difficult for them to meet Turkiye's price targets, despite some respite from the euro weakening against the dollar.

In this context, buyers' side sentiments indicate that there will be no such upward movement so far due to weak demand in the domestic steel market as few of them might come with $300/t level quotes as neither demand for scrap nor steel sales nor costs meet recent scrap level. Hence, scrap should be much lower as per market participants.

Recent high-price deals from the UK and the US at $352/t CFR have boosted sellers' side sentiment and made some recyclers and agents think that the import scrap market may have reached its bottom. However, this sentiment is cautious and does not guarantee an immediate reversal in the downward trend.

Recent deals:

• A West Marmara mill booked 12,000 t of HMS (80:20) at $352/t and 18,000 t of shredded and PNS at $372/t CFR from the US.
  
  
• Another USA supplier sold HMS(80:20) at $352/t to the same mill.
  
  
• A West Marmara mill booked UK-origin HMS (80:20) at $346/t.
  
  
• A Marmara-based mill booked HMS(80:20) from Sweden at $351/t two days ago.
  
  
• A couple of US-origin cargo heading to Marmara were booked at $352/t price.
  
  
• A West Marmara mill booked a US cargo for late August: HMS (80:20) and shredded-bonus scrap at $355/t and $375/t CFR Turkiye.
  
  
• A Mediterranean-based mill booked cargo at $362/t and $387/t CFR (HMS, shredded, and bonus scrap).
  
  
• An East Marmara-based mill booked Baltic-origin cargo at $355/t and $375/t CFR Turkiye (HMS (80:20) and bonus scrap).
  
  
• A Northern Europe seller to Turkiye sold at $354.5/t (HMS(80:20)) and US-origin cargo to Aegean-based mill at $355/t CFR (HMS (80:20)).
  
  
• An East Marmara-based mill booked US-origin cargo for August: HMS (80:20) at $354.5/t CFR.
  
  

Updates on the Turkish steel market

Looking at other segments in the Turkish steel market, the rebar and billet markets are also experiencing challenging situations. Weak demand and competitive prices from other exporters have kept pressure on Turkish export rebar prices. The billet segment is similarly gloomy, with participants not anticipating a fast market recovery, and the approach of August and its traditional holiday period is dampening moods.

Rebar market under pressure: The Turkish finished steel segment remains in an unfavorable situation, leading to further pressure on scrap quotes. As a result, many mills are avoiding engaging in active negotiations with scrap suppliers. Insiders predict that upcoming transactions may witness even lower prices due to the prevailing market conditions. Turkish export rebar prices continue to be affected by persistent weak demand. The ongoing summer holidays in Europe have resulted in quiet demand from the region. Additionally, Turkish rebar prices are considered too high for buyers compared to competitive offers from other exporters.

Billet market gloomy: The mood in the Turkish billet segment remains pessimistic as market participants do not foresee a swift recovery. Due to this situation, both local and foreign suppliers are infrequently presenting semis offers. Likewise, buyers are showing little interest in making purchases. Adding to the market's uncertainty is the approach of August, which brings the traditional holiday period and further dampens the sentiments of the participants.

Turkish billet producers are currently offering semis to local customers at a price range of $525-535/t exw for prompt shipment. This indicates a downward slide from the $530-540/t exw range seen just a week earlier.

Other updates: Turkiye's Tosyali Holding, one of the country's largest steel producers, is investing in green steel production to reduce carbon emissions and improve sustainability. Their new integrated flat steel mill with low-energy electric arc furnaces is expected to start commercial production in the fourth quarter, and the company aims to meet 50% of its energy requirement with renewable energy sources by 2025.

Similarly, Habas, another major steel manufacturer in Turkiye, is investing in additional rebar and wire rod capacity, which is expected to enhance its competitiveness both domestically and internationally. The steelmaker plans to commence the construction phase of its new 1.25 mnt/ year longs asset next month with a duration of 16 months, according to the recent update. The project value is estimated at TRY 94.5 million (about $3.5 million at the current exchange rate), out of which TRY 75 million ($2.8 million) will be spent on machinery and equipment.

Outlook: The recent downward trend in imported scrap prices might persist, especially if the finished steel market remains stagnant. Additionally, the expected hikes in energy prices from August could further strain the industry's production costs and buying frequency of scrap.