Turkey ferrous: Baltic to determine price direction

The Turkish scrap import price was flat today with price direction and speed of direction now dependent on whether Baltic exporters can wait to sell until after the Turkish holiday of 19-23 July.

The Argus daily HMS 1/2 80:20 cfr Turkey steel scrap assessment was flat at $484.70/t cfr today.

Most of the remaining August shipment trade with Turkey is expected to be with Baltic exporters. Only two Baltic-origin cargoes have traded so far for August shipment. Mills are expected to need another 15 cargoes for August shipment. Five or six more cargoes are expected to be available from the US for August shipment. US exporters have sold a significant quantity of August shipment much earlier than they sold July or June shipment to Turkey because of strong flows and less bullish expectations for August delivery prices to US mills. This comes despite US steel prices continuing to rise.

The weaker sentiment in the US has already brought dockside purchasing prices down around $5-10/gt in nearly all east coast exporting regions, averaging around $395/gt delivered to dock for #HMS1 today. US freight rates to Turkey are also starting to fall although no exact price levels have yet to be established.

Continental European exporters still find it very difficult to drive dockside purchasing prices for HMS 1/2 material to €360/t delivered to dock or lower.

Turkish mills can continue to bide their time after many deep-sea scrap suppliers showed their availability for August shipment at the same time in the past 10 days. They have little concern about steel markets for the rest of this year as more fundamental support is shown by China.

China's steel exports will decrease in 2021 under a policy to cut or maintain crude steel output at 2020 levels, a major Chinese mill said today. Perhaps the most significant point is that China's steel exports rose by 30pc in the first half of 2021, representing an annualised pace 39pc above volumes exported in 2020. This means there will have to be a huge turnaround in Chinese export statistics in the second half of 2021 to be able to meet this government-led target year-on-year, and very likely mean China will be a net importer of steel products for the rest of this year.

This comes after the announcement of Tangshan production restrictions last week and also China's indication of a loosening of fiscal policy last week when it announced it will reduce the reserve requirement ratio by 50 basis points and release about $155bn of liquidity effective on 8 July.

The Argus daily A3 cif Marmara steel scrap assessment was flat at $457.50/t cif.