Over the past two weeks, Turkey’s import scrap market has been silent. Turkish producers have concluded at least 25 cargoes during December, as SteelOrbis reported previously. Therefore, mills are in no rush for further bookings. On the other hand, the number of deep sea scrap offers are rising in the market. The situation is clearly in favor of Turkish producers.
SteelOrbis has learned that there are at least twelve deep sea scrap offers in the market, while Turkish mills are monitoring the situation on the finished steel demand. December scrap prices in the US may have only settled a week ago, but scrap market sources throughout the US say they’re already starting to hear chatter about upward pricing during next month’s buy cycle. The big question at this point is whether the market will be up by $10-$20/gt, or whether it will settle at up $20-$30/gt once the dust settles. On the EU side, market participants expect a strong start to the new year. However, due to the lack of interest from Turkey, deep sea scrap prices are under a significant pressure and are expected to decline at least $10/mt with the next deals. Meanwhile, short sea scrap quotations may be impacted faster by the lack of demand early next month and record a deeper decline. Decreasing short sea prices may also help producers to gain some time against the resisting deep sea scrap suppliers.
Demand for rebar in Turkey has not changed over the past weeks, and is still on the low side, with some Turkish mills starting to reduce their domestic rebar prices once again this week. Not just discounted offers coming out of Turkish mills but also the spot rebar market is moving down. Turkish Central Bank has decided to raise its interest rate from 40 percent to 42.5 percent yesterday, December 21. As a result, a few mills are adopting an aggressive pricing policy to generate cash while giving sizeable discounts as the year is about to end. The increasing trend in deposit rates are also reducing the cash flow in steel markets, having a negative impact on trading. According to market participants, even if present strong flat steel market sentiments are influencing pricing due to ongoing sluggish business activity, many small and medium-sized traders provide discounts to serious customers. Aside from that, the continued domestic financial difficulties and expected rises in expenses have created uncertainty and concern among flat steel spot market traders for the coming month's prediction. Another important note was announced by the Turkish Steel Exporters’ Association (ÇİB) on December 20. Adnan Aslan, chairman of the ÇİB, has stated that Turkey has become a net importer in terms of finished steel products, especially wire rod, for the first time since 2015.
The disruption observed in the shipping route over the Suez Canal is also attracting attention and market players are monitoring the situation. While Yemen is considered an export destination for Turkey, a possible intervention may cause problems for Turkey’s exports. Also, approximately 19,000 ships navigate the Suez Canal each year, it is one of the world’s key routes. According to the Guardian, “More than 100 container ships have been rerouted around southern Africa to avoid the Suez canal, in a sign of the disruption to global trade caused by Houthi rebels attacking vessels on the western coast of Yemen. The diversion adds about 6,000 nautical miles to a typical journey from Asia to Europe, potentially adding three or four weeks to product delivery times”. The 2021 blockage of the Suez Canal lasted a week and the total damage on global trade was estimated around 6-10 billion dollars at that time.