Turkey ferrous: Price up, China steel slows momentum

The Turkish ferrous scrap import price increased today on a Baltic sale to an Izmir mill yesterday evening but news that large volumes of Chinese rebar were sold into southeast Asia over the past two days threatened to temper the rise in overseas and local demand for Turkish finished steel products.

The Argus daily HMS 1/2 80:20 cfr Turkey and HMS 1/2 75:25 fob Rotterdam steel scrap assessments increased $3/t to $273.50/t and $242.10/t.

A Baltic supplier was heard to sell HMS 1/2 80:20 at $273.50/t and bonus at $283.50/t cfr Izmir for March shipment yesterday evening.

The Izmir mill is expected to need at least one more deep-sea cargo in the coming days for March shipment after its sharp increase in local steel sales this week.

Chinese exporters sold over 100,000t of rebar to Hong Kong, Singapore and Myanmar at $415-420/t fob China on theoretical weight basis and $430/t fob China on actual weight basis yesterday. A 30,000t sale was heard today at the equivalent of $428/t fob China on actual weight basis.

These prices were at near-parity with the fob Turkey export rebar price, which Argus assessed unchanged at $429.10/t on actual weight basis today.

Turkish mills usually make sure their export rebar offers are a minimum $20/t lower than Chinese export offers. Although this is usually to maintain possibility of selling into southeast Asia, Turkish mills also like to keep this spread in order to reduce the impact of Chinese price movements on their sales to the Middle East and North Africa.

The Chinese sales removed Turkey's ability to sell into southeast Asia for the immediate future, confounding speculation that the ongoing coronavirus outbreak would create a window for strong sales to the region by Turkish steelmakers.

Turkish steelmakers are consequently now expected to become more cautious with their deep-sea scrap bids but they are not likely to pull back from the market as their demand is still healthy and they are still receiving strong appetite for rebar from other destinations. Mills are likely to require a combined 400,000-500,000t purchases of March shipment deep-sea scrap over the next 10 days.

Buyers of Turkish rebar in the Middle East and Africa are expected to conclude business with mills at a minimum of $425/t fob Turkey next week. Some African importers questioned whether to drop bids from this level today on the chance that Chinese export rebar prices might fall further next week. But most buyers in the region were wary of buying Chinese material and look content to continue bidding for Turkish rebar at $425/t fob.

One major European trading firm serving African import markets with Turkish steel said that their customers want to remain away from Chinese product because of the possibility that the effects of the coronavirus could delay Chinese shipments.

"Customers now want to cover themselves with non-Chinese material in this period of uncertainty and have waited for Turkish prices to bottom for some time," the trading firm said.

Domestic rebar stockist demand in Turkey was still strong today, and two Marmara mills announced they have closed local sales until 17 February. But indications emerged of downward pressure on prices next week.

All increased demand since 7 February has come from stockists and end user demand is still weak. Stockists said their own demand will dissipate next week as inventories will be high after the restocking period.

"At the end of February, we will likely see lower local prices again," one major stockist said.

Turkish short-sea import prices continued to move up today. Bulgarian exporter was confirmed to sell HMS 1/2 80:20 at $261/t cif Marmara yesterday evening. A Romanian exporter was heard to sell HMS 1/2 80:20 at $263/t cif Marmara today.

The Argus daily A3 cif Marmara steel scrap assessment increased $9.50/t to $262/t while the daily A3 Russia-Ukraine fob Black Sea assessment moved up $7.50/t to $244.50/t.