The Turkish scrap import price decreased on Friday on a continental European cargo sale for April shipment concluded yesterday.
The Argus daily HMS 1/2 80:20 cfr Turkey steel scrap assessment moved down $7/t to $650/t cfr.
A continental European supplier sold HMS 1/2 80:20 at $640/t cfr Izmir for end April / early May shipment yesterday.
This compared to another continental European sale at $645/t cfr Iskenderun for HMS 1/2 75:25 concluded the day prior.
Continental European exporters have increasingly shown throughout this week that they are concerned about lower demand from domestic buyers after several electric arc furnaces in Spain, Italy and Germany halted or restricted production in the past seven days. Many European mills have been unable to maintain normal operations because of rising electricity, gas and raw material prices.
At least 11 continental European cargoes have been sold to Turkey since Thursday last week, almost 69pc of the deep-sea cargo sales traded with Turkey during this period.
Potential lower scrap consumption from southern Europe in particular appears to be having a knock-on effect to short-sea markets in southeast Europe as many short-sea offers to Turkey have built up in the past few days.
The increase in the number of deep-sea and short-sea offers to Turkey and the concerns over European mill scrap consumption caused continental European dockside scrap prices to fall at the end of this week. HMS 1/2 80:20 was purchased at €510/t delivered to dock this morning, down from some purchases at €525/t delivered to dock earlier this week, and some bids stood today at €500-505/t.
But Turkish scrap importers were confirmed to make new deep-sea enquiries towards the end of today, which indicates their need to continue steadily buying to cover steel sales. They may feel that they have taken enough heat out of the price rise and that their slightly reduced demand during the middle of the week was successful enough to push some suppliers to accept new deals at relatively flat prices. Two Turkish mills even questioned why some scrap suppliers think the price rise is over.
The other driver for Turkish steelmakers to make more purchases now is that the lower European scrap demand offers a window to conclude more deals at flat price levels at a time when competition in the seaborne long steel market from southern European steelmakers has weakened. Turkish mills' competition was of course already lessened by the Russian-Ukraine crisis. This is the ideal scenario for Turkish steelmakers and will allow them to increase scrap-rebar margins.
Turkish scrap importers will likely be cautious about dropping bids as they do not want to communicate any weakness in the ferrous complex that could limit their opportunity to make new steel sales.
And there is no firm indication of any genuine downward pressure on Turkish steel prices. Large volumes of finished and semi-finished products have been sold by Turkish steelmakers to traders in the past two weeks and those traders now need time to sell those purchases. That led to a pause in new business for Turkish rebar producers towards the end of the week, both locally and overseas, and created the perception among some market participants that rebar price increases have also at least temporarily ended.
But demand for new business was still apparent on Friday. A Marmara mill was in negotiations with a Canadian buyer for rebar and waiting for a counter on its $960-965/t fob targeted sales price.
At least 29 deep-sea scrap cargoes have been purchased by Turkish mills for April shipment, according to Argus records, with at least another 11-12 cargoes to be purchased. Longer steel sales lead times after the rapid increase in demand for Turkish products mean that several Turkish mills will also be booking May shipment cargoes before the end of this month.
The Argus daily HMS 1/2 80:20 cif Turkey (short-sea) assessment decreased $5/t to $625/t on Friday on lower bid-offer indications.
