Turkish deepsea import scrap market stable in Jun-Aug as buyers and sellers remain cautious

Turkish deepsea import scrap market remained steady through June to August, with both buyers and sellers remaining cautious amid forex rate volatility and summertime lull.

Market activity remained sluggish in early June ahead of Eid al-Adha holidays June 9. Participants remained on a wait-and-watch mode for a while, awaiting clarity on near-term price direction after returning from holidays.

Sellers in the US as well as in the EU remained firm with offer levels amid expectations of a strengthening domestic market in the US and a strong euro against the US dollar.

The euro was assessed at $1.1714 June 27, up from $1.1698 June 26, according to S&P Global data. The euro was assessed at $1.771, July 1, and at $1.1779 July 2.

Turkish mills, however, cited weak rebar demand as a primary reason for which they remain reluctant to pay higher prices.

Availability of competitively priced Asian billets also dampened the demand for scrap, according to sources.

The outbreak of a conflict between Israel and Iran also impacted sentiments.

Veysel Yayan, general secretary of the Turkish Steel Producers' Association, told S&P Global Energy on June 19 that the Turkish steel industry faces mounting pressure from indirect effects of the Iran-Israel conflict, as rising energy costs threaten competitiveness.

In August, market activity remained bearish as buyers and sellers remained on a wait-and-watch mode to assess near-term sentiment following reports of mills facing financial difficulties.

Alter Iron and Steel is the latest Turkish steel producer to declare concordat due to financial difficulties, amid ongoing tight monetary policies in the country to reduce high inflation.

Several market participants also remained away on holidays due to the summer holidays, with mills heard not being in a rush to book September shipments.

Price dynamics

The Turkish deepsea import scrap assessment witnessed minor increases from June to August, with prices largely remaining rangebound and hovering within $340-$347/mt CFR levels.

Platts, part of Energy, assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $340/mt CFR June 3, which rose to $342.50/mt CFR June 19, and to $345/mt CFR June 23. The price continued to move sideways for the remainder of June.

The price then moved up to $347.50/mt CFR July 7, following a slew of deals heard concluded as mills booked cargoes for August shipment. The price inched lower slightly July 8, to $347/mt CFR.

The price again moved down $2/mt July 11 to $345/mt CFR, before climbing back up to $347/mt CFR July 17. The price then notched down to $346/mt CFR July 25 and then remained stable for the rest of July and early August.

The price moved up to $347/mt CFR Aug. 7. The price dipped slightly to $346.50/mt CFR Aug. 14 and then to $346/mt CFR Aug. 15 before rising back up to $347/mt CFR Aug. 18.

September outlook

Market participants expect prices to remain rangebound in August, with scopes of recovery in September as finished steel demand picks up post-summer break.

Sources are also looking forward to the monetary policy committee's rate cut decision in the upcoming Sept. 11 meeting, to gauge near-term financial conditions.

At its July MPC meeting, the Central Bank of Turkey resumed interest rate cuts, reducing the policy rate by 300 basis points to 46%. The Turkish Central Bank held its key interest rate steady at 46% earlier in June.

US recyclers remain reluctant to lower offers amid steady dry freight rates and strong domestic cues, while those in Europe stay optimistic as scrap collection costs continue to remain within Eur245-250/mt delivered to dock levels, according to sources.