Turkey shredded scrap purchases up on weak HRC complex

Turkish steelmakers' purchases of imported shredded ferrous scrap have increased substantially in June as buyers have taken advantage of high availability caused by weak demand for hot-rolled coil (HRC) in their suppliers' domestic markets.

Turkey has purchased at least 238,500t of shredded scrap since the beginning of June, more than double the 108,500t purchased in the whole of May.

The 238,500t was accumulated through 15 deep-sea cargoes. June purchases will be delivered this month and in July.

Only 30,000t of shredded scrap was reported to have been sold to Turkish mills by exporters in the first half of May. Another 78,500t was sold in the second half of May as deep-sea scrap exporters started to increase their shredded scrap sales appetite amid expectations that prices would fall considerably in the first week of June, when June-delivery US domestic scrap prices were negotiated.

The average deep-sea cargo bought by Turkish steelmakers in May contained 8,346t of shredded scrap, while the average deep-sea cargo purchased so far in June contains 15,900t — almost double the volume.

A US scrap exporter sold only up to 12,000t of shredded scrap in May, in two deep-sea cargoes, but has sold four cargoes already in June, with the shredded scrap totalling 57,000t.

A second US supplier and a Scandinavian supplier both sold 12,000t and 16,000t of shredded scrap to Turkey in May and June, respectively.

Another deep-sea scrap exporter has substantially increased its shredded and HMS sales volumes to Turkey in June.

Shred is a key feedstock for HRC and has become increasingly available at lower prices, from US exporters in particular. US HRC prices have been hit by oversupply amid a slowdown in domestic and global automotive markets, and US steelmakers' demand for shred has declined accordingly.

Argus' HRC ex-works US Midwest domestic assessment decreased from $670/st ex-works at the start of May to $565/st ex-works on 11 June, a fall of $105/st.

Turkish steelmakers are also experiencing weak demand for flat products from their own domestic automotive industry, and their increased purchases of shred are likely being undertaken in order to build stocks at favourable prices rather than to fulfil any urgent requirement.