Turkey ferrous: Price flat, euro weakens

The Turkish scrap import price was flat today with little indication of any change in offer indications as the euro continued to gradually depreciate against the US dollar, potentially creating room for European exporters to move offers lower when buying resumes.

The Argus daily HMS 1/2 80:20 cfr Turkey steel scrap assessment was flat at $480/t cfr today.

The euro has weakened against the US dollar gradually throughout July and reached its weakest point since early April today below €1.176: $1. Continental European and Baltic exporters are calling for lower dockside purchasing prices this week, mainly because of the drop in Turkish scrap import prices, but it is not clear at what level sub-suppliers will sell large tonnages in both regions.

In the UK, the pound sterling has weakened more significantly against the dollar since hitting £1.39: $1 in on 10-11 July. It fell to GBP1.36: $1 yesterday and today.

Turkish mills are gauged to require at least 15 deep-sea cargoes for August shipment once they return to the market next week. September shipment cargoes are expected to start trading in tandem with remaining August shipment sales in the week commencing 2 August.

Turkish mills' scrap-rebar margins look sustainable based on the availability of US scrap and strong fundamental steel support from China. China has imported billet at $718/t cfr from Malaysia this week, reflecting the country's continued demand for lower-priced seaborne material.

Turkish steelmakers will not want to lower scrap prices too sharply on the chance that this could spoil the opportunity to attract domestic rebar demand at the end of July and beginning of August. If Turkish rebar stockists see that scrap import prices are at or near bottom, they will be encouraged to buy post-national holiday.

Market participants noted today that iron ore and Chinese steel prices are now moving in opposite directions because of the production cuts outlined for the rest of the year in China and speculated whether scrap prices will be impacted. The Argus ICX 62pc iron ore index fell $7.70/dmt to $212.80/dmt cfr China today.

But the rise in China's steel prices in July and the likelihood of those prices sticking amid production cuts for the rest of the year, combined with the possible introduction of a steel export tax on 1 September, has put Turkish mills in an ultra-competitive export position given the widened spreads that have opened up between Turkish and Chinese rebar prices.

This export steel strength should apply upward pressure on Turkish scrap import prices. But several deep-sea scrap suppliers will be motivated to sell swiftly next week on Turkey's return so any steel-driven recovery in scrap prices may not occur for another two to three weeks.

In the short-sea Turkish imported ferrous scrap market, the Argus daily A3 cif Marmara assessment was flat at $450/t today.