Turkey ferrous: Price edges down: Correction

Corrects freight rate fixture in paragraph 4

The Turkish scrap import price fell today on bid indications at $425/t and offer indications at $430/t cfr Turkey for premium HMS 1/2 80:20.

The Argus daily HMS 1/2 80:20 cfr Turkey steel scrap assessment fell $2.10/t to $427.50/t cfr today.

Turkish mills are largely holding back from firm bids as they see sufficient sales appetite to push prices down. They gauge that a fall in bulk freight rates over the past three weeks means they will be able to find sellers at an equivalent premium HMS 1/2 80:20 level of around $425/t cfr.

Baltic freight rates for 30,000t scrap cargoes to Turkey have fallen from around $27/t last week to around $23/t this week. A US exporter fixed a 30,000t scrap cargo from the US east coast to Italy at $22/t at the the start of this week, which shipbrokers said would indicate a freight rate of $25/t for USEC-Turkey - down from just under $40/t at the end of March.

Another deep-sea cargo was confirmed to have traded with Turkey last week, bringing the total number of recorded May shipment cargoes to 20. With around 25 May shipment cargoes estimated to have been purchased in total, Turkish mills only need around 15-18 cargoes to complete the shipment period purchase requirements. Cargoes are available for May shipment from all regions: US, Scandinavia, Russia, Baltic, UK and continental Europe.

The final portions of May shipment trading will likely occur in the first few days of May, which is still three weeks away. This could result in deep-sea scrap prices falling below $425/t cfr Turkey in the next 10 days but market expectation is that upward price pressure will reassert around the end of this month when June shipment trading becomes liquid.

That upward pressure could be limited if too many offers come into the market when demand increases, as was the case in late March-early April when the extent of the price rebound from $415/t cfr was curbed by strong sales appetite.

There is no sign of scrap supply becoming tight in the coming weeks, but scrap is currently under-valued relative to iron ore and steel, so sellers may seek to become more disciplined about selling when the Turkish demand does increase in order to push for a stronger price rise next time around. The scrap-iron ore ratio is now below 2.5.

Some suppliers could also hold back availability during the next period of strong Turkish demand on the basis that mills have significantly widened their scrap-steel margins while scrap exporter margins in some regions have been under pressure.

Chinese domestic rebar prices increased for a second consecutive day, up Yn30/t, amid higher futures.

The Turkish lira has appreciated against the US dollar since the beginning of the week on expectation that the Turkish Central Bank could decrease interest rates tomorrow. This fuelled optimism among Turkish rebar stockists and end users that they could soon see lower lira-denominated rebar prices that would stimulate demand. Appetite will be further supported by local buyers' need to rebuild rebar stocks.

No short-sea scrap supplier appears able to find demand at $410/t cif Marmara for western Black Sea-origin HMS 1/2 80:20.

The Argus daily A3 cif Marmara steel scrap assessment moved down $2.50/t on Wednesday to $407.50/t cif.