Turkey ferrous: Price up on Canadian deal

The Turkish scrap import increased significantly on Thursday on a Canadian cargo sale to an Iskenderun mill yesterday that did not include any shred.

The Argus daily HMS 1/2 80:20 cfr Turkey steel scrap assessment increased $8.70/t to $509.70/t cfr today.

A Canadian supplier sold 9,500t of #1 HMS, 7,500t of rails and 12,000t of of P&S at an average price of $525/t cfr Iskenderun for July shipment.

Turkish mills largely withdrew from buying throughout last week when price expectations became increasingly bullish in continental European and US domestic scrap markets. Only a small amount of material was available at lower prices for Turkish mills and offers have remained largely absent this week, particularly from continental Europe and the US. A Marmara mill swept up several of those lower-priced cargoes and now other Turkish mills are having to follow offer levels higher.

No shredded material in the Canadian booking potentially indicates that sellers with shred availability will achieve premium HMS 1/2 80:20 sales of above $510/t cfr. Mills appear to be paying premium HMS prices in compensation for not paying the prices that suppliers can achieve in alternative markets for shred and other higher grades.

A cargo of busheling was heard sold from Europe to the US early this week at around $620/t fob or $650/t cfr US east coast, which indicates just how much of a discount Turkish mills are being given. The shredded equivalent price for the Canadian cargo is $524.70/t cfr, according to Argus' calculation, similar to the $524/t cfr level of the shred portion of a UK trade into Turkey earlier in the week.

Turkish domestic rebar offers have risen by up to $40/t this week in response to growing demand from traders with low stock levels in a still relatively under-supplied market, which should allow mills to entertain higher scrap price levels as margins are not under downward pressure now.

Some mills have lifted offers $40/t in Iskenderun, Izmir and Marmara, from a prior level of $680/t ex-works to around $730/t ex-works. Demand continued to be healthy today with sales heard up around $10/t on the day to $710-720/t ex-works excluding VAT. An Izmir mill was heard to sell 10,000-15,000t today at TL7,150/t ex-works including VAT, equating to $710.30/t ex-works excluding VAT. Turkish mills have sold far larger quantities above $700/t ex-works this week than they did when they offered and sold very small amounts below $700/t ex-works last week.

Record levels of US/European domestic scrap consumption, rising Turkish domestic rebar prices, and a resurgent Chinese domestic steel market all point to firm Turkish scrap import prices in the near future. Several sellers and buyers of Turkish scrap predicted this could be a period of price consolidation, which was supported by the absence of any market noise that vastly higher prices are upcoming which can tend to appear on a day when scrap prices have risen significantly.

Chinese domestic steel prices kept rising today on expectations of crude steel output cuts in upcoming months. Market participants discussed the possibility of a cut of around 20mn t crude steel output this year, which built bullish sentiment for steel prices. Shanghai mainstream rebar prices rose by Yn70/t to Yn5,030/t on soaring futures. October rebar futures rose in the morning by 2.68pc or Yn135/t to Yn5,168/t.

The difficulties that Turkish mills have experienced in finding high-grade scrap from deep-sea markets may push mills to secure larger tonnages from short-sea regions such as Rostov and significantly improve bid levels. A Ukrainian and a Rostov supplier will soon offer $495/t for HMS 1/2 90:10 and $500/t for A3 material, respectively. Freight rates from Rostov to Marmara have also surged in the past week, back up to $40/t.

The Argus daily A3 cif Marmara steel scrap assessment increased $7.50/t to $480/t.