Turkish mills are continuing to resist deep-sea scrap suppliers’ offer levels amid sluggish steel sales, notes Kallanish.
A single deep-sea scrap deal was heard from Germany on Tuesday at $343/tonne cfr Türkiye for 13,000 tonnes of HMS 1&2 80:20, and at $363/t cfr for 7,000t of shredded and 6,000t of bonus grade material. The supplier initially entered the market with a $352/t cfr offer but, due to a lack of interest, lowered it to $348/t cfr last week before finally closing the sale at $343/t cfr.
Given the typical premium Turkish mills pay for German-origin material, the latest deal suggests an equivalent price of $340-341/t cfr for HMS 1&2 80:20 from other European deep-sea suppliers. This marks a clear sign of softening in scrap prices, reflecting subdued buying appetite and pressure on offers.
Sentiment in the Turkish steel market has turned more bearish this week amid weak steel sales and a sharp downturn in China, where rebar and hot rolled coil futures continued to decline. Rebar futures have even touched their lowest in nearly eight years. Turkish mills, anticipating further billet price drops from Asia, remain cautious and are holding off on scrap purchases.
Most scrap suppliers nevertheless anticipate a pickup in Turkish market activity in the latter half of the week, with the Eid al-Adha holiday confirmed as not being extended and beginning on 5 June. Turkish producers have yet to cover most of their July-shipment scrap requirements.
Despite the scrap price softening, some suppliers believe the downside will be limited. One notes: “I expect prices to remain rangebound. A further drop of more than $2-3/t seems unlikely due to the strong euro-dollar exchange rate and limited scrap flow in the EU.”
However, one Turkish mill expects the next European booking to fall below $340/t cfr, citing abundant offers currently circulating in the market.
A European supplier finds workable prices for HMS 1&2 80:20 at $339-341/t from the EU, $342-345/t from the Baltic and around $347/t cfr from the US.
European scrap suppliers, increasingly convinced they will not achieve their target prices, have started lowering dock values to €257-265/t ($291-300) since Monday.
While US suppliers are attempting to hold their offers at above $350/t cfr, market participants remain sceptical. Most expect US scrap prices to edge down towards $345/t cfr in the near term, aligning with softening sentiment globally.
A trader says: “Türkiye’s steel sales are struggling, pressuring both steel and scrap prices. Unless we see a recovery in the Chinese market or a rate cut from the Turkish Central Bank on 19 June, a meaningful rebound looks unlikely.”
“It is not in the interest of either party to pressure scrap prices too much,” says another trader who expects values to remain rangebound for July cargoes.
Meanwhile, the seasonal summer slowdown is seen to have arrived earlier this year in the EU and US.
Besides sluggish steel export sales, the Turkish domestic rebar market remained weak on Thursday amid financial constraints. Some mills slightly decreased their prices, with offers at $545-565/t ex-works, depending on the region.
