Turkiye: Imported scrap trade resumes; buyers look for discounts

Imported scrap buyers returned to the market in Turkiye but remained less active this week after a round of bookings done last week. Some deals were heard to have been booked. Moreover, mills are now looking for more discounts. Negotiations continued to happen. However, no fresh deals were heard concluded. Meanwhile, weak finished steel sentiments kept steel producers cautious about fresh scrap bookings.

Additionally, energy issues are also among the current slew of challenges being faced by Turkish steelmakers. The mills are reluctant to set firm bids for imported scrap and are just observing the market situation. Suppliers have set a new target level for US scrap at up to $380/t CFR for HMS 1&2 (80:20).

SteelMint’s assessment for the US-origin HMS 1&2 (80:20) stands at $365/t CFR, down by $10/t w-o-w.

Recent deals

• Turkiye’s East Marmara-based buyers sourced a Baltic-origin cargo at an average price of $367/t CFR for HMS 1&2 (80:20) for November shipment.
• In another deal from the Netherlands, HMS (80:20) was traded at $363/t CFR to Turkish steel mill for November shipment.

Slow domestic market movement

• Lira stable against the dollar: The national currency, Lira, remained largely unchanged  against the dollar from last one month. It is currently trading at 18.5 against the greenback.
• Local billet supply limited due to cost issues: Turkish mills continued to push billet prices up amid rising costs. Moreover, only a few suppliers are interested in billets sales, while the majority prefer to focus on finished steel, where the business activity slightly improved this week. There is a shortage of domestic billets due to high scrap prices and production costs, wherein some mills stopped production earlier.
• Local rebar prices move down on weak trade: Steelmakers started to lower their rebar prices as buying interest from local customers remained modest. Offers for domestic rebars from Turkish longs producers lost $10/t since last week and now are set at $700-720/t exw, depending on the region. Turkiye’s long steel producer ICDAS kept its prices unchanged this week at $715/t exw-Biga and $726/t CFR Marmara.
• August auto output still trails behind in Turkiye: In August, Turkish automotive producers failed to achieve high auto sales, lacking demand support and suffering from rising costs. The continued shortage of electronic components is one of the issues, the car industry is facing these days. Passenger car production, which accounts for the greater part of the total amount, inched down by 3% to 496,302 units during January- August 2022. However, total automotive output rose an annual 2.3% to 833,146 units over the first eight months of 2022, according to the Turkish Automotive Manufacturers’ Association (OSD).
• Turkiye needs an alternative to scrap, energy sources: Turkish steel industry has planned to implement a massive capacity expansion programme. The steel mills faced some challenges, which should be overcome in the longer term to ensure the sector’s sustainable development. The country has to find new sources of raw materials to reduce dependence on global scrap supply and provide energy security to tackle the issues of surging costs. An increase in production costs due to high energy prices has also affected the steelmakers, forcing them to adjust their production schedule and putting them in conditions of tough competition.

Outlook: The imported scrap trade is likely to move at a slow pace as finished steel demand picks up gradually. In addition, increased cost of production has kept buyers cautious. As a result, buyers opted for a wait-and-watch policy.