Turkey ferrous: Price down, US scrap flows strong

The Turkish scrap import price decreased today on a slightly lower bid-offer indication spread as Turkey began its national holiday today until 23 July.

The Argus daily HMS 1/2 80:20 cfr Turkey steel scrap assessment decreased by $1.70/t to $483/t cfr today.

After three US exporters made multiple sales to Turkey for shipment within the next 30 days at an average price of around $491/t cfr for premium HMS 1/2 80:20, they are in suitable positions in terms of collection. Dockside purchasing prices on the US east coast are set to move lower by tomorrow after last week's falls based on increased volumes available. The rise in scrap flow is causing price expectations for the August trade with US steelmakers to become increasingly bearish. US east coast dockside purchasing prices for #1HMS are expected to average no more than $385/gt delivered by tomorrow evening.

It is likely that Turkey will only find a few US offers next week when they fully return to market. US exporters will likely look to increase margins further by waiting until August to sell again, and potentially profit from the expected increase in Turkish demand and the likeliness for Turkish scrap import prices to maintain levels or even move up once the demand strengthens. The $15/gt drop in US dockside purchasing prices by the end of this week could however mean that any rise in Turkish scrap import price may be capped soon after, as US exporters look to guarantee those strong margins via sales. So far this year, US domestic suppliers have mostly been shielded to the risks of owing late-shipments to mills because of consecutive gains in US domestic ferrous scrap prices since April. Heading into August, some suppliers fear that the issues could come to a head as increased scrap flows, an overhang of obsolete grades from July and recent declines in export prices could put downward pressure on obsolete grade prices next month and open the door for mills to issue end-of-month cancellations.

Turkish export and domestic rebar prices look well-floored based on the unrelenting increase of Chinese domestic and export rebar prices, so US exporters will be mindful of selling too early. Chinese export rebar offers today increased to $915/t fob on theoretical weight basis - the price levels last seen in the first half of May. This gives Turkish mills room to increase rebar sale price targets. It is not impossible for Turkish mills to increase scrap-export rebar margins to above $240/t for the first time this year but deep-sea scrap suppliers are expected to show more discipline when offering to Turkey at the end of July compared to at the beginning of July, partly because of China's upward momentum but also because of Russian export taxes come 1 August. Today there was market discussion in Asia that China will levy a 20pc export tax on hot-rolled coil (HRC) from 1 September.

Argus' daily A3 cif Marmara steel scrap assessment decreased by $2.50/t to $452.50/t cif on lower offer indications.