Turkish ferrous scrap purchasing lead times to shorten

Turkish steel mills importing ferrous scrap look on course to shorten the period between purchase and shipment of scrap cargoes on high scrap availability and diminished rebar demand.

Turkish steelmakers extended scrap purchasing lead times significantly in the fourth quarter of last year to around three months because unprecedented global steel demand led mills to make sales for shipment periods far further forward. Turkish export rebar was sold as far as four months ahead.

But weaker global and domestic rebar demand for Turkish steelmakers since the start of January has combined with a turnaround in scrap availability after domestic prices reached record highs by the second week of January in many scrap exporting regions.

Turkish steelmakers state that they may now stay out of the scrap market for more than a week because of the scrap options now available amid weak overseas steel demand, which may be accentuated by the little movement expected by China throughout the next few weeks until after the lunar new year holiday. Deep-sea scrap cargoes for February shipment have been offered to Turkey during the price fall, a shipment period mills are covered for.

Turkish steelmakers are estimated to need more than 15 cargoes for March shipment but look on course to purchase the majority of those cargoes in February. This would see them considerably shorten their scrap purchasing lead times but they are mindful of the risk of finding no scrap cargoes at the bottom market price if this excess scrap supply today is exhausted quicker than expected. Mills have suitable scrap-rebar margins in place and scrap availability today suggests that they will not lose those margins in the immediate future, giving them time to now wait to finish March shipment buying.

By Alex Reynolds