Turkey ferrous: Price down on increased supply

The Turkish scrap import price fell today following a Scandinavian sale to a Marmara mill yesterday at $440/t cfr as higher supply mounts pressure on the Turkish scrap import price.

The Argus daily assessments for HMS 1/2 80:20 cfr Turkey and HMS 1/2 75:25 fob Rotterdam fell by $15/t to $435/t and $401.60/t, respectively.

A Scandinavian supplier was heard to have sold 13,500t of HMS 1/2 80:20 at $440/t, 9,000t of shred at $445/t and 6,500t of bonus at $450/t cfr Marmara for March shipment yesterday.

This pared the shred-HMS 1/2 80:20 premium back to $5/t from $10/t seen in trades since October 2020. This reflects the fact that US scrap flows, particularly for shredded scrap, have risen strongly on the east coast since January domestic settlements finalised at the start of last week. European scrap flows were also slowing improving, as the close to €100/t month-on-month increase in the German domestic market encouraged some suppliers to lift operations.

Three deep-sea exporters have sold to Turkey at consecutively lower prices in the past week since indications that a turnaround in US domestic scrap supply was imminent after the US domestic trades settled with significant month-on-month increases. All three deep-sea exporters either sell in the US domestic market or sell export cargoes to the US.

US January price settlements averaged $100/gt up on December and US exporters gave indications to local market participants that export HMS 1/2 80:20 prices would reach $500/t cfr Turkey in early January.

The surge in prices and price expectations boosted sub-suppliers' sales appetite. Even at today's lower Turkish import prices, several sub-suppliers still consider this a rare opportunity to be able to sell at historic price levels — above $400/t cfr Turkey equivalent — and continue to sell inventories.

The falls in Turkish rebar and domestic scrap prices lagged the decreases in imported scrap prices, which further support the view that the Turkish scrap market is driven by supply fundamentals.

The Argus daily fob Turkey steel rebar assessment decreased by $5/t to $620/t fob on an actual-weight basis today based on a heard rebar sale at $655/t cfr Hong Kong on an actual-weight basis this week. Turkish mills typically profit from any rebar demand when scrap prices fall significantly, because Turkey is a dominant rebar exporter and a price setter in the global scrap markets.

Turkish mills needed to become more competitive in the seaborne steel markets, as their prices were higher compared with Chinese steel prices. The increase in scrap supply and lower Turkish mill scrap demand has combined to probably allow Turkish mills to become very competitive again when scrap offers begin to dry up or steel demand begins to rise. But market participants' views were mixed at what price level this will occur.

In the Turkish short-sea import market, demand was very weak today after offers for Romanian HMS 1/2 80:20 fell by over $10/t on the day to $420/t cif Marmara. Yet buyers were still not interested.

The Argus daily A3 cif Marmara and A3 Russia-Ukraine fob Black Sea steel scrap assessments decreased by $17.50/t to $415/t and $397.50/t.