Turkey ferrous: Price edges up, bids begin to firm

The Turkish scrap ferrous import price edged up on Friday as bid levels began to firm after mills closed multiple deals over the course of this week at prices that were highly favourable relative to a healthy rebar and billet market outlook.

Many deep-sea deals concluded towards the end of the week as demand rose to take advantage of strong sales appetite displayed by exporters.

High near-term scrap availability has caused Turkish scrap import prices to weaken significantly relative to the rest of the global ferrous complex over the past month. The Turkish scrap import market has fallen more than $30/t since the last week of June, during which time iron ore prices remained almost flat up until Wednesday.

The short-term supply glut may now be clearing after six deep-sea scrap sales to Turkey were reported concluded since Wednesday. Five Turkish mills have bought at a minimum equivalent premium HMS 1/2 80:20 price of $465/t cfr since Wednesday, which indicates buyers see limited prospects for any further downside.

The Argus daily HMS 1/2 80:20 cfr Turkey steel scrap assessment increased 80¢/t to $468.30/t cfr today.

Different scrap buyers and suppliers' price ideas are still varied in a tight range but bids have come as high as $470/t cfr Turkey for equivalent US-origin HMS 1/2 80:20 in the past 24 hours.

A continental European supplier was heard to sell 25,000t of HMS 1/2 80:20, 10,000t of shred and 5,000t of HMS1/P&S in the past 24 hours. Market participants communicated various price permutations depending on their calculation of the price differentials agreed for the grades within the cargo.

A Baltic supplier sold 30,000t of HMS 1/2 80:20 at $469/t and 8,000t of bonus at $484/t cfr Iskenderun for August shipment yesterday. This was the Iskenderun mill's first ever deep-sea cargo purchase, as reported by Argus earlier this week.

A St. Petersburg supplier sold HMS 1/2 80:20 in the low $470's cfr Marmara for August shipment mid-week.

A second continental European supplier sold HMS 1/2 80:20 at $460/t on a cfr Izmir basis and a cfr Marmara basis on Wednesday, both for August shipment.

A third continental European supplier sold a deep-sea cargo to Egypt yesterday.

Turkish mills were calculated to require at least 10 deep-sea cargoes for August shipment before these bookings were heard, which means around 5-6 cargoes are now likely left to be booked. Several suppliers will need to sell August shipment cargoes next week, which could curb the extent of a price rise in the short-term. But a strengthening in the euro-dollar exchange rate, particularly since the middle of this week, is calculated to have added around $5/t to European exporters' costs.

Belgian and Netherlands exporters this week bought bought HMS 1/2 at €340/t and €342-343/t delivered to dock respectively, but do not anticipate any further decrease in dockside prices.

Turkish domestic rebar stockists will be encouraged to see Turkish mills buying many deep-sea cargoes, and a bottoming of the scrap price will further encourage rebar purchases ahead of a potential price rise. Stockists expect demand to appear in larger volume by the middle of August.

Overseas rebar customers are also likely to resume buying Turkish rebar by the middle of August after business has been mostly quiet since the last buying cycle in the first half of July when many global regions stocked up on Turkish material before the country's national holiday. Turkish export rebar prices are strongly supported by the ongoing increase in China's physical rebar prices, which was again apparent today.

The continued pick-up in the rate of Turkish scrap demand next week will put upward pressure on prices but the extent of a price rise may still be limited depending on what US scrap exporters target for their September shipment offers after US domestic negotiations with local mills for August deliveries begin to settle next week.

Several support factors have emerged for US export prices that were not present when US suppliers dropped the Turkish market after July domestic negotiations. Ex-Turkey overseas demand for US scrap may be starting to re-emerge after the first US east coast bulk sale heard in the past three weeks to anywhere bar Turkey was made to Mexico on Wednesday. The cargo was understood to include HMS and shredded material.

Additionally, US exporters must once again factor in extremely high freight rates from the US east coast to Turkey, which unexpectedly surged back towards $45/t this week after dropping back to the mid-$30s/t in mid-July.

In the short-sea Turkish imported scrap market, the Argus daily A3 cif Marmara steel scrap assessment was flat at $440/t on Friday.