The Turkish scrap import price was flat today as mills began to increase demand in response to a rebound in Chinese domestic steel prices, a lack of deep-sea scrap offers and squeezed scrap exporter margins.
The Argus daily HMS 1/2 80:20 steel scrap HMS 1/2 80:20 cfr Turkey assessment was flat at $415/t cfr.
A Marmara mill sought to purchase more than one deep-sea cargo today without giving bid indications but deep-sea scrap suppliers have slowly sold off most of their April shipment cargoes elsewhere in the past 10 days. The steelmaker is understood to need at least two April shipment cargoes. It offered export rebar at $620/t fob today, with the possibility for $615/t fob offers in the near-term, likely dependent on upcoming scrap purchase price levels.
Chinese domestic rebar prices increased Yn60/t ($9.17/t) since yesterday morning and rebar futures were higher today. Chinese steel exporters have been trying to ship export products as quickly as possible all week because they expect steel export tax rebates to be cut on 1 April. Export urgency has been boosted by speculation that other Chinese regions will be asked to curb production levels along the lines of the cuts recently ordered for the Tangshan region.
Turkish mills attempted to stimulate the local rebar markets today in response to the lack of scrap offer indications. An Iskenderun mill told local stockists that it purchased a scrap cargo today but there was no evidence that any scrap supplier had sold to the steelmaker. The mill also told the scrap seller side that it did not purchase a cargo.
An Izmir mill told local stockists it sold 16,000t of rebar today at TL5,630/t ex-works including VAT, equivalent to $599.40/t ex-works excluding VAT. Another steelmaker said the Izmir mill may be anticipating that the lira will appreciate against the US dollar in the coming days but other market participants said that a lira price of that level was not attainable today given that traders' prices were significantly lower.
Turkish domestic rebar stockists are unlikely to purchase large volumes until they have taken sufficient time to see clearer scrap import price indications, fully gauge the lira/USD rate development and assess Chinese steel market movement and its effect on Turkish exports.
On the export rebar market, two European enquiries for 20,000t of rebar each have been received by Marmara steelmakers, with end of May shipment being discussed. Bid levels are $600-605/t fob Turkey. There was no rush from Marmara mills today to sell at this level.
Export rebar prices are currently healthy for Turkish mills and future sales prospects are also favourable based on the upward movement in Chinese steel prices this week.
Some market participants said it is possible that Turkish mills may find it difficult to maintain scrap-domestic rebar margins at current two-and-a-half year highs of around $190-195/t as they may have left it late to buy their remaining April shipment scrap requirement and to start buying May shipment cargoes at a time when domestic rebar demand is weak. Only three May shipment cargoes have been purchased so far.
All deep-sea scrap suppliers are aware Turkey needs to buy a minimum 30-35 cargoes in the next four weeks, and resistance to sell today was stronger than yesterday.
But margins could still be preserved by stronger local rebar prices. Marmara mills said they will not sell below $610/t ex-works no matter the change in lira/USD rate, and local rebar stockists are widely expected to stock up again by early April.
Short-sea scrap prices into Turkey increased for the second consecutive day. A bid for Bulgarian HMS 1/2 80:20 was received yesterday evening well above $390/t cif Marmara. The bid is effectively $22/t higher than a bid made on Monday this week, when the lira weakened significantly against the US dollar. Turkish mills naturally tested scrap suppliers' resolve on 22 March in light of that news.
The Argus daily A3 cif Marmara steel scrap assessment and the daily A3 Russia-Ukraine steel rebar assessment increased $1/t to $396/t and $388/t today, respectively.
