Turkey ferrous: Price up on US deal

The Turkish scrap import increased on Thursday on a US sale to an Izmir mill for end of July shipment concluded yesterday.

The Argus daily HMS 1/2 80:20 cfr Turkey steel scrap assessment increased $4/t to $499/t cfr.

A US supplier sold 10,000t of HMS 1/2 80:20 at $499/t, 16,000t of shred at $519/t and 2,000t of bonus at $519/t cfr Izmir for end July shipment yesterday.

Turkish mills had attempted to stay out of the market over the past week in an effort to push premium HMS 1/2 80:20 prices down to the low $490s/t cfr Turkey but offers remained firm at $500/t cfr, forcing buyers to lift bids. Turkish domestic rebar and billet demand also strengthened over the past day to support mills' scrap bid levels.

Premium HMS 1/2 80:20 offers were heard to remain at $500/t cfr Turkey following on from the new deal. Because scrap market consensus had grown yesterday that Turkish mills will be in the full flow of August shipment purchases next week, suppliers have also been able to maintain offers at unchanged levels.

Some suppliers have been forced to maintain export offer levels because of the losses that would have been made at lower sales levels based on current high dockside purchasing prices. Continental European exporters' offers have remained largely off the market in the past 10 days because of the strength in offers from their own suppliers.

Increasing Chinese domestic physical steel prices this week in addition to a stronger euro against the US dollar have both reversed the patterns of last week also.

Scrap supply fundamentals are driving the strong market and Turkish mills have lost around $10/t from their scrap-rebar margins across domestic and export rebar markets according to this latest US deal.

Argus' cfr Turkey steel scrap assessment has increased $3/t from $496/t cfr to $499/t cfr in the past week, while Argus' weekly Turkish domestic steel rebar assessment fell the equivalent of $9.80/t on the week.

Deep-sea scrap exporters still remain optimistic about potential price upside as they do not see any possibility for scrap fundamentals to weaken and supply to increase in July and August as US and European domestic markets are already showing strong demand for these months. This could mean Turkish mills' scrap-rebar margins have already peaked for the rest of the summer period.

The steel complex could also start to strengthen again today following news that Russia may potentially impose 15pc base export duties on exports of ferrous products with additional tariffs on top from 1 August to 31 December.

If the final approval is issued and scrap is confirmed to be subject to this duty, this could have huge knock-on effects in terms of limiting scrap availability to Turkey in certain market conditions while also significantly limiting Turkey's seaborne steel competition into regions such as Africa, the Middle East and southeast Asia, either of which would place upward pressure on scrap prices.

Turkish mills started receiving better demand for their rebar locally today, which indicates that scrap-rebar margins are also not under so much pressure. Turkish domestic rebar stockist consensus grew yesterday that prices could not fall below $700/t ex-works. An Izmir mill was heard to sell more than 5,000-8,000t of rebar locally today at TL7,210/t ex-works including VAT, equivalent to $705.50/t ex-works excluding VAT. Traders showed better demand in Marmara, Izmir and Iskenderun today with Marmara mills‘ offers flat at around $725/t ex-works excluding VAT.

Domestic billet demand also increased sharply, with Iskenderun material heard sold at $695/t ex-works excluding VAT in large volume to several buyers today and yesterday, a highly competitive price level against today's scrap price.

Several short-sea scrap suppliers to Turkey expected earlier this week that there would be a dramatic recovery in bid levels by next week following sharp falls in some suppliers' sales earlier this week. Bid levels began to recover already today, with bids at $455/t cif Marmara for HMS 1/2 80:20.

The Argus daily A3 cif Marmara steel scrap assessment increased $12.50/t to $460/t.