Turkey ferrous: Price falls on deal: Correction

Corrects cfr Turkey steel scrap assessment and composition/prices of deal

The Turkish scrap import price fell below $495/t cfr today on a continental European sale to a Marmara mill for August shipment yesterday evening.

The Argus daily HMS 1/2 80:20 cfr Turkey steel scrap assessment decreased by $3.20/t to $493.60/t cfr today. A continental European supplier sold 28,000t of HMS 1/2 75:25 and 2,000t of bonus/HMS1 at an average $486.50/t cfr Marmara for August shipment.

The drop in prices over the second half of this week has largely been attributed to high stocks built up by exporters over the past three weeks, which has triggered an urgency to sell and significantly heightened availability of deep-sea cargoes in the market.

The level of the deal will likely cause continental European exporters to drive delivered to dock bids for HMS 1/2 below €365/t. If sub-suppliers meet lower requests early next week, it is possible that other continental European exporters may look to sell to Turkey at similar price levels, particularly if they have large stocks and expect that the Turkish price has further to fall.

A Baltic seller today targeted a sale at around $492-493/t cfr Turkey for premium HMS 1/2 80:20 after offering at $500/t at the start of the week. Two UK suppliers, two US suppliers, one Russian supplier, two Baltic suppliers and one continental European supplier were all seeking to sell to Turkey today.

The number of deep-sea scrap suppliers that looked to target deals at virtually flat levels of $500/t cfr at the start of the week allowed Turkish steelmakers to apply pressure with lower bids, even as their demand increased.

Many market participants said that even though suppliers have built up stock in the three weeks that Turkish mills were largely withdrawn from the market, they could have held back amid the rising demand and increased appetite for Turkish rebar this week. Turkish mills are being careful not to spoil that rebar demand by advertising lower-priced scrap deals, but they also do not want to overpay for scrap given the strength of availability that has arisen.

Based on Argus' cfr Turkey steel scrap assessment of $493.50/t cfr and fob Turkey steel rebar assessment of $727.50/t fob today, Turkish mills have almost regained their previous $240/t scrap-rebar spreads, which they started targeting again from 15 June when they withdrew from scrap purchases.

Turkish mills are still expected to buy around 20 deep-sea cargoes for August shipment. Claims that they purchased over 100,000t of Libyan and Ukrainian scrap in late June do not appear likely, based on the maximum average 200,000 t/yr the two countries sell to Turkey combined.

A northern Turkey mill bought 5,000t of Bulgarian HMS 1/2 80:20 at $460/t cif Marmara yesterday. The extremely wide spread that had built up between short-sea and deep-sea prices could not be sustained as some short-sea suppliers are providing good quality HMS scrap. But the decrease in deep-sea scrap prices may panic some short-sea suppliers, which could cause Romanian HMS 1/2 80:20 prices to lower again through the middle of July. The Argus daily A3 cif Marmara steel scrap assessment increased $2.50/t to $457.50/t.