Turkey ferrous: Price up on six deals

Market: Metals
07/04/21

The Turkish scrap import price increased significantly today on six deals concluded mid-week as the global steel complex continued to strengthen and domestic rebar sales in Turkey picked up.

The Argus daily HMS 1/2 80:20 cfr Turkey steel scrap assessment increased $8.90/t to $432.40/t cfr.

A Russian supplier was heard to sell HMS 1/2 80:20 at $428/t cfr Iskenderun for May shipment.

A continental European supplier was heard to sell 20,000t of HMS 1/2 80:20, 11,000t of shred, 8,000t of bonus and 2,000t of busheling at an average price of $433/t cfr Izmir for May shipment.

A second continental European supplier was heard to sell 10,000t of HMS 1/2 80:20 at $431/t and 5,000t of bonus at $441/t cfr Samsun for May shipment. The price level is significantly higher than the other continental European sale, potentially indicating the lack of suitable offers for this buyer but also potentially the added freight to get to Samsun compared to other Turkish destinations like Marmara, particularly for a cargo of only 15,000t.

A US supplier was heard to sell HMS 1/2 80:20 at $435/t and shred at $445/t cfr Marmara for May shipment, indicating the $10/t spread returning between HMS 1/2 80:20 and shred prices.

A second US supplier was heard to sell 13,000t of HMS 1/2 80:20, 15,000t of shred and 3,000t of bonus at an average price of $439/t cfr Samsun for May shipment.

A Baltic supplier was heard to sell 16,000t of HMS 1/2 80:20, 8,500t of shred, 4,500t of bonus, 3,500t of rail road scrap and 2,500t of a mix of busheling and new cuttings at an average price of $436/t cfr Iskenderun for May shipment.

A total of 11 deep-sea cargoes have been recorded for May shipment so far. A total of 33 cargoes were recorded for April shipment although some of these had latest 5 May shipment assigned.

The jump in the Turkish scrap price today brought the market more closely into line with the stronger global steel price dynamics that have emerged over the past two weeks.

Shanghai domestic rebar prices have increased Yn350/t, around $54/t, during the period since mid-March in which Argus' cfr Turkey steel scrap assessment has increased $17.40/t from $415/t cfr to $432.40/t cfr today. This indicates a significant amount of room for scrap import prices to increase a lot further. The pace of the increase will very much depend on how many scrap offers mills receive in the next day or two.

Some deep-sea scrap suppliers only targeted sales today at a maximum of $435/t cfr Turkey for premium HMS 1/2 80:20 despite the strength of other scrap markets and the Chinese steel complex, which indicates the pace of any further Turkish scrap price increase is not yet likely to accelerate rapidly. Any sharp increase in Turkish demand could jeopardise the margins of several deep-sea scrap suppliers from the UK and continental Europe which have made multiple sales in the past two weeks, because of the effect strengthening global demand would have on dockside purchasing prices.

The move above $430/t renewed discussion among some market participants as to why many scrap suppliers were content to sell in a low to mid-$420s/t last week after a US sale was heard done at $430/t on 29 March, particularly given the strength of Turkish scrap-steel margins at the time. At least eight deep-sea and short-sea deals were concluded at lower equivalent prices than that US sale on 29 March. And many suppliers sold at around $415/t cfr Turkey a week prior.

But the depreciation of the euro against the US dollar combined with weaker Turkish domestic rebar sales provided ample basis for a temporary downward correction in some scrap deal prices to Turkey last week. Both of those pressures have disappeared in the past two days.

The euro continued to appreciate against the US dollar today having changed direction at the start of this week, reaching almost EUR1.19:$1 as of 15:45 BST.

And Turkish domestic rebar demand significantly increased today and yesterday. Argus reported since the second week of March that domestic rebar demand would likely increase in Turkey in the first week of April.

A Marmara mill sold 5,000-7,000t of rebar locally at $625/t ex-works excluding VAT today. A second Marmara mill closed sales early in the day. A third Marmara mill offered $610/t ex-works in the Biga region, indicating that it will likely have attracted even stronger demand.

Most mills preferred not to sell large volume for the moment because of how strong the demand has become. Turkish mills are set make multiple export and domestic rebar sales in the coming days at increasingly higher price levels. Turkish export rebar prices have only increased $10/t during the time Chinese domestic rebar prices have increased $54/t, which means Turkish offers into regions such as southeast Asia will be extremely competitive.

Short-sea scrap offers to Turkey increased today after lower-priced deals were done at the start of the week, with Romanian and Bulgarian HMS 1/2 80:20 offered at $415/t cif Marmara today.

The Argus daily A3 cif Marmara steel scrap assessment increased $8.50/t to $412.50/t.

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