Turkey ferrous: Price flat, US could cap rise again

The Turkish scrap import price was flat today as expectation grew that US exporters could again cap a potential price rise at the beginning of August having previously done so at the beginning of July, June, April and March this year.

The Argus daily HMS 1/2 80:20 cfr Turkey steel scrap assessment was flat at $484.70/t today with trading activity limited amid the start of a national holiday that will last throughout next week.

HMS and shred prices for August delivery to US domestic steelmakers are expected to at best rollover from July, which means north American exporters could be on course to sell a bulk of their September shipment cargoes in the first 10 days of August once Turkish demand increases at the end of July.

US exporters have already sold the majority of their August shipment cargoes. Baltic-origin material is expected to largely trade with Turkish mills in the next round of deals in the second half of July.

In the first 10 days of March, April, June and July, north American exporters entered the Turkish market and capped price rises on all four occasions, which also stopped any potential for their dockside purchasing prices to rise significantly. The lowest sales margins for US scrap exporters in the past five months have been around $25/t, Argus calculates. An average of 70pc of north American sales monthly sales to Turkey occurred in the first 10 days of each of those four months.

European market participants said today that US exporters' aggressive sales strategy in the first week of July indicates they do not expect Turkish HMS 1/2 80:20 prices to reach $500/t cfr in the foreseeable future. US exporters' approach was partially influenced by their estimation that US domestic supply comfortably matched what domestic steel mills needed in the first week of July.

But the Turkish scrap import price looks likely to bottom when demand increases post-national holiday. This will occur alongside Russian export tax duties coming into place on 1 August and after China severely cut bank reserves and implemented a policy which will likely decrease steel exports significantly in the second half of 2021.

Southeast Asian rebar bid levels are also increasing after an Indian sale to Hong Kong at $750-755/t cfr yesterday and after Chinese domestic rebar prices increased a total of YN380/t ($58.70/t) since 22 June.

Turkish mills will see if they can push down scrap sellers' prices during the first half of next week but as soon as they see fewer offers, they could immediately start bidding at gradually increased levels. Turkey's domestic rebar market returned today with Izmir and Iskenderun stockist demand shown at a minimum of $710/t ex-works excluding VAT.

Turkish mills look to be on course to achieve their widest scrap-rebar margins so far this year, as they are already close to their previous 2021 highs of $220-225/t for scrap-domestic rebar and $240/t for scrap-export rebar.

In the short-sea import market, the Argus daily A3 cif Marmara steel scrap assessment decreased was flat at $455/t.