Turkey has concluded its first ex-US scrap booking since the beginning of this month, with the benchmark HMS I/II 80:20 scrap price moving up in the deal. However, the increase has remained below sellers’ expectations. Most scrap suppliers were aiming for higher than $385/mt CFR Turkey levels in offers yesterday, June 11.
SteelOrbis has learned that an ex-US scrap booking was done by a producer in the Marmara region for HMS I/II 90:10 scrap at $386/mt CFR and shredded scrap at $404/mt CFR. This information signals approximately $383-384/mt CFR for HMS I/II 80:20 scrap. Therefore, SteelOrbis’ reference prices for ex-US HMS I/II 80:20 scrap has been revised down from the anticipated $385/mt CFR to $383-384/mt CFR.
Ahead of the holiday starting on June 16, Turkish mills are not cutting their production rates. A source at a major Turkish mill commented on the issue saying, “Most EAF-based producers are reported to be working at a 54 percent capacity utilization rate. Cutting this further means sending workers home while continuing to pay them, reducing shifts and at some point increasing costs per unit. Most mills are not willing to do that, but are trying to compensate for losses with other products or by the other advantages of the companies.” Although the domestic steel market is expected to recover a little before the holiday due to the usual stance of traders, this recovery is not expected to last long. Turkey’s economy is slowing down amid steps taken by the government. Also, making investments is not attractive considering interest rates and the cost of loans. Many think that the second half of 2024 may be hard on mills. There is little potential for Turkey’s exports to recover in the short term. “The local Turkish market is still under pressure from capacities due to the lack of exports. The domestic market is not sufficient to drain the current capacities,” another source said. One trader noted, “Actually, the scrap segment is the better segment nowadays. There is still some movement. We have failed to import or export semi-finished or finished products for a long time and are not expecting things to change in the short term.” Some scrap suppliers still believe deep sea prices will move up further ahead of the holiday. One European source said, “Collection prices do not allow us to lower our offers to Turkey. If US-based suppliers can hold their positions in terms of prices, we expect deep sea scrap prices to increase ahead of the holiday or during the holiday. It is well known that Turkish mills do not stop buying over the holidays when scrap is needed. Also, there is still some demand being received from Turkey.” However, they are also not sure what the situation will be after the holiday. Meanwhile, scrap collection prices in the EU have increased this week. A German scrap sub-collector reported that EU-based export yards are paying €310-315/mt DAP right now for scrap, but this source thinks prices should be at around €317-320/mt DAP. “At least this is my aim. I can accept such prices and sell some of my inventory,” the sub-collector reported. While the US domestic scrap market has declined by approximately $40/mt in the June buy-cycle, most market players think ex-US scrap suppliers will try to keep their offers to Turkey firm. “They now can collect at lower prices. Since European scrap has little to no room for a decline, they will also have some leverage and keep their prices higher than the EU,” one source pointed out. Under the current conditions, Turkey’s import scrap market is set to remain firm. Depending on the demand coming from Turkish mills, prices have the potential to move up further, though no surge in prices is expected.