Turkey ferrous: Price flat, rebar creates pressure

The Turkish scrap import was flat today as domestic rebar prices came under significant downward pressure to force sales well below $700/t ex-works excluding VAT.

The Argus daily HMS 1/2 80:20 cfr Turkey steel scrap assessment was unchanged at $501/t cfr.

Deep-sea scrap suppliers without shred to offer continued to face limited bid indications at the equivalent of below $500/t cfr Turkey for premium HMS 1/2 80:20, but Turkish mills were largely silent today.

Several of those suppliers were heard to be offering cargoes to Turkish mills yesterday and there was no sign today that any have lowered their sale targets to below $500/t cfr.

Many scrap sellers have said in the past week that scrap prices will not fall directly in line with any downward steel price movement, as the decrease has so far only reduced record high steelmaker margins to a level that is more typical yet still healthy.

But Turkish mills are bound to seek a way to maintain the high margins they have enjoyed in recent months. At the levels deep-sea scrap suppliers ask today, mills would achieve $180-190/t scrap-rebar spreads based on current domestic rebar sales prices.

Local sales volumes have been small this week and mills are well sold for multiple months ahead on export, but export prices are also undergoing a significant downward correction. An Indian exporter was heard to sell rebar to Hong Kong at $730/t cfr on actual weight basis this week, indicating that Turkey would need to move down to around $710/t fob to be in with a chance to secure a sale today.

Either Turkish mills will have to stay out of the scrap market for several more days to put scrap sellers under pressure or they will have to show the rebar markets that scrap is bottoming if scrap availability does not increase.

Several mills can afford to wait many days as they look towards August shipment for their next scrap purchase but several others still need to buy July shipment at a time when US and European domestic scrap demand is at its highest this year.

US June delivery price expectations became more bullish this morning with domestic mills actively trying to secure cut grades at minimum up $50/gt from May prices although no official price has yet been established in the market with widespread trading expected to begin later today.

Several continental European exporters have displayed their bearish stance on the market by not bidding and looking for lower prices. Regional exporters have been able to attract lower prices for HMS 1/2 material from €370/t delivered down to €355/t delivered last week but this week there is resistance from sub-suppliers' via offers at €360-365/t delivered.

Argus' weekly Turkish domestic steel rebar assessment decreased TL300/t to TL6,990/t ex-works including VAT, equivalent to $686.40/t ex-works excluding VAT, down $36.60/t.

Argus' daily fob Turkey steel rebar assessment decreased $12.50/t today to $725/t fob on actual weight basis.

In the short-sea import market, the Argus daily A3 cif Marmara steel scrap assessment was flat at $470/t.