Posted on 15 Nov 2023
Scrap prices in Turkey continue to climb on the latest deal, although Turkish mills are struggling to sell steel at higher prices.
A western Turkish mill bought a UK-origin cargo at $379/tonne cfr Turkey for HMS 1&2 80:20 and $404/t cfr for shredded and bonus. Besides the higher-priced HMS 1&2 80:20, the wider spread between HMS and shredded, at $25/t, is noteworthy in this deal. The previous deals from the UK were concluded at $372-373/t cfr levels for HMS 1&2 80:20 last week.
One mill source, who does not accept this deal as a reference price for the market, tells Kallanish: “I cannot say prices increased by another $6-7/t this week. This mill might have a reason for paying a higher value but this does not mean others will follow. There are no such [higher-priced] steel sales.”
Although most mills are ignoring the latest UK-origin deal’s price, scrap suppliers have already further increased their price targets.
One supplier says: “Although demand has had a weak start to the week, it may change at any time. There is no certainty in the market. I see that some suppliers have backed off from the market after the UK-origin deal.”
Another supplier expects demand to resume in the near term, lifting prices further. “There is no negative expectation. It is normal that Turkey takes a break; mills initially have to digest prices. I am sure the next deals will not appear at below today’s levels. On the contrary, Turkey may have to pay even higher prices for scrap once demand resumes.”
An offer for HMS 1&2 80:20 from the US is heard at $385/t cfr Turkey.
Mills, however, do not find further rises in scrap prices workable as they expect more hikes in energy prices from December.
“We don’t have such margins [to absorb the price hikes]. Besides, our current offer prices for steel do not work. Turkey cannot afford higher prices for scrap,” says a western Turkish mill.
Despite the unfavourable situation in steel sales, however, almost all market participants are convinced that scrap will remain firm in the near term, ahead of the winter holidays and conditions that will further hamper supply.
“Scrap is already Turkey's biggest problem and will become an even bigger headache in the future, continuing to pressure Turkish producers’ competitiveness and margins,” says a trader.
Besides weak exports, demand for rebar remained almost non-existent on Tuesday. Mills’ offers stood mostly at $580-595/t ex-works. However, offers at as low as $567/t were available from stockists, specifically in the west.
Source:Kallanish
