Turkiye: Low domestic rebar sales keep imported bulk scrap offers stable w-o-w

• Slowdown in domestic rebar sales weakens scrap purchase
  
  
• US recyclers firm amid higher November expectation
  
  

Turkish imported bulk scrap prices remained largely stable w-o-w after a sharp decline last week. This stability was due to a slowdown in domestic rebar sales that affected fresh inquiries from steel mills.

On the other hand, there is an issue of scrap availability from the US market as the demand from domestic American mills remains firm.

However, buyer targets remained conservative, with most mills unwilling to exceed $365/t CFR for European material. Market participants were in a wait-and-watch mode.

"The Turkish market isn't as appealing to us as it once was," a US recycler stated, "but I also don't see many reasons for Turkish mills to pay higher prices."

Assessment trends

• BigMint's assessment for US-origin HMS (80:20) bulk scrap stood at $372/t CFR, up by $1/t w-o-w.
  
  
• BigMint's assessment for bulk HMS (80:20) from the US East Coast stood at $344/t FOB, down by $1/t w-o-w.
  
  

"Around 1-2 bulk scrap cargoes were booked from Europe which was unusual in terms of prices, as their exchange rate is falling, which will help them reduce their offers," he added.

Additionally, rising freight rates have created more challenges for suppliers, especially from Europe with the cost for a 30,000 t Supramax cargo on the Rotterdam-Aliaga route increasing to $24-24.5/t, a rise of $3/t since the beginning of October.

Despite these difficulties, sellers seem confident in keeping their current offer levels as mills wait for better market conditions to start buying again.

Currently, the scrap-to-rebar spread stood at $240-242/t, with rebar prices at $610-615/t and US-origin HMS (80:20) at $372/t CFR.

Export offers hovered at around $610-615/t FOB for November shipments, with weak sales.

Market insiders noted, "The mood in the US is optimistic and suppliers are not keen on lowering prices. However, buying scrap is tough for Turkish mills with slow rebar sales, and pushing scrap prices down only leads to more pressure from rebar customers."

Suppliers held firm due to steady collection costs, a tight US market, and expectations of higher November prices. A US recycler noted strong domestic trade, with US-origin HMS (80:20) targets at $375/t CFR and above.

Indicative offers for US and Baltic-origin material were higher compared to EU-origin offers which were at around $365-367/t.

Domestic rebar market

A Turkish mill representative noted, "The slowdown in domestic rebar sales is directly affecting our scrap purchases. We need a clearer picture of our rebar order books before committing to scrap buys. While there's plenty of material available from sellers, mills are hesitant to buy due to the weakening and steadily declining rebar market."

A trader added that mills are intentionally cooling the market, pushing to lower scrap prices as domestic rebar sales have stalled.

Turkiye's real estate market saw a sharp rise in sales in September 2024, hitting the highest levels since December 2022. House sales increased by 36-37% y-o-y to 140,900 units, with Istanbul leading at 21,310 units, followed by Ankara and Izmir. Mortgaged transactions surged by 87%, accounting for 11% of total sales, up from 8% last year. First-time sales grew by 47% and second-hand sales by 33%. Cumulatively, sales for January-September 2024 rose 5% to 947,230 units. However, sales to foreigners dropped by over 30%, with 2,020 units sold in September.

Outlook

Market participants suggested that Turkish mills are likely to keep pressing for lower scrap prices, with a bearish near-term outlook. Strong domestic scrap sales in the US make it difficult for sellers to match the price targets set by Turkish mills.