Turkey ferrous: Mills look to slow price increase

The Turkish scrap import price was flat today as most mills began to cap bids below $360/t cfr Turkey for premium HMS 1/2 80:20 amid lower domestic rebar and billet sales this week following on from a slight weakening of export steel demand in the second half of November.

The Argus daily HMS 1/2 80:20 cfr Turkey and HMS 1/2 75:25 fob Rotterdam steel scrap assessments were flat at $357.50/t and $324.10/t.

A St. Petersburg supplier sold 24,000t of HMS 1/2 80:20 at $358/t, 6,000t of bonus at $368/t and 1,500t of rail at $373/t cfr Iskenderun for first half February shipment today. Because the deal was received after Argus' timestamp, it could not be assessed.

Turkish steelmakers indicated today that they are now seeking to temporarily pause further increases to the scrap price following a rapid three-week surge that saw the Argus HMS 1/2 80:20 cfr Turkey price rise $61.40/t from 10 November to today.

Strong domestic and export steel sales meant there was minimal resistance to scrap price increases from Turkish mills during that time. But volumes of long steel sales both locally and overseas have dropped this week, driving Turkish mills to push back against higher seaborne scrap offers in a bid to temporarily pause the price rise until they can clarify their demand levels moving into 2021.

Uncertainty over domestic demand was strengthened by Turkish President Erdogan's announcement yesterday of the country's most widespread lockdown measures to date to restrict the spread of Covid-19. A night-time curfew will be imposed on weekday nights and full lockdown measures will be in place over weekends.

The move followed a sharp spike in coronavirus infections and fatalities in Turkey in November. New daily cases reached a record high of 31,219 on Monday while daily deaths from the disease rose to 188, which was also a Turkish record high.

Iskenderun billet and rebar prices have stagnated at $510/t and $530/t ex-works this week, and Izmir mill sales volumes are down since offers increased to $530-540/t ex-works. Chinese domestic rebar prices have also fallen on the week and southeast Asian import demand has followed suit.

Any attempts by Turkish mills to slow the scrap price rise will be balanced against persistent requirement for high grade material, tightness of availability from exporting regions and the emergence of demand from other scrap-consuming geographies.

US cargo offers with large tonnages of shred are still above $365/t cfr Turkey and there are at least two mills which may be attracted to source this material at this price level depending on their steel order commitments.

US scrap exporters are still firm at a minimum $360/t cfr Turkey for premium HMS 1/2 80:20 and shred is so lacking in availability in scrap markets worldwide that a premium price for mixed cargoes is targeted by those that have reserves of that material.

It is difficult to envisage that US dockside purchasing prices will increase at the same rate that US December domestic delivery prices are expected to rise this week, which would keep US exporters' dockside prices for #1 HMS well below $300/t delivered to dock for at least this week.

Continental European exporters showed some willingness today to sell HMS 1/2 below $355/t cfr Turkey but any appetite for flat to lower prices was curbed by their high dockside prices, with many suppliers unwilling to sell lower than €255-260/t.

US exporters have most of their January shipment availability to sell but several Baltic and continental European exporters are sold out for at least first half January shipment.

Turkey is far ahead of the curve in terms of scrap purchasing relative to many other global importing destinations because of its large share of seaborne steel demand. This means that other destinations will need to catch up with their scrap purchasing in December, tightening scrap supply to Turkey during the month.

Egypt has bought several cargoes in the past week but enquiries still continue from north Africa, south Asia and Latin America. US exporters may expect their slightly delayed January shipment cargo offers to be swept up quickly by some of these destinations.

Turkish mills have purchased at least 20 deep-sea cargoes for January shipment, the most ever recorded to have been bought by the end of any month for two months in advance. Mills need to control the extent of the increase of their purchasing lead times based on their Q4 steel sales in order to retain sufficient scrap offers, availability and maintain their scrap-rebar margins.

A US offer at $360/t cfr Turkey for premium HMS 1/2 80:20 was heard in the middle of last week, and the same-grade US material was heard sold at $360/t cfr Egypt this week for December shipment.

In the Turkish short-sea imported ferrous scrap market, the Argus daily A3 cif Marmara and A3 Russia-Ukraine fob Black Sea steel scrap assessments were flat at $337/t and $324/t.