Turkish scrap prices continue the upward trend

Turkish scrap import prices increase w/w

The Turkish scrap market has continued the rebound and buying activity was more active last week. Our assessment for HMS 1/2 80:20 increased to $381 /t CFR on five fresh deals, up by $7 /t w/w and $31 /t m/m.

Scrap prices⁽¹⁾ $/t	11-Nov	18-Nov	25-Nov	02-Dec	09-Dec
HMS 1/2 80:20 CFR Turkey	350	339	339	374	381
Shredded CFR Turkey	370	359	359	394	401
Notes: (1) weighted average of known transactions from all points of origin.

There has been no improvement in real demand in the Turkish finished steel market. Exports are limited to small volumes to the likes of Israel and Yemen, while most of the trade activity remains in the domestic market. For scrap, because of tighter supply in winter, there has been a wave of restocking for buyers to ensure a sufficient level of stock before the holidays and before prices rise further. Based on the latest deals, scrap prices seem to have settled at the $380 /t CFR mark.

Asian scrap offers also started to move up since the beginning of December following the Turkish market trend, and buyers started to restock last week although real demand stays weak. A deal was done at $410 /t CFR Vietnam for HMS 80:20. For H2 from Japan, a deal was concluded at $380 /t CFR Vietnam, and offers further climbed to $390-395 /t CFR Vietnam.

Outlook: The rebound in Turkish scrap prices will be temporary

Turkish scrap market may turn silent again after the wave of restocking last week, as demand from steel production stays weak and market transactions will be limited in the holiday season. Going forward, scrap prices are likely to face some downside risks when seasonal supply tightness eases, though the main uncertainty comes from demand. Our current base case is that the situation of depressed steel demand will last until the end of Q1. Q2 should see some recovery, which will therefore support scrap demand and prices.