Turkish scrap prices inch up slightly while bearishness remains

Turkish scrap market has turned quiet again after some purchases in mid-October. We heard three fresh deals completed in , which slightly lifted our assessment to $372 /t CFR (+$4 /t w/w, +$28 /t m/m).

Scrap prices(1) $/t23-Sep30-Sep07-Oct14-Oct21-Oct
HMS 1/2 80:20 CFR Turkey344365368368372
Shredded CFR Turkey364385388388392
Notes: (1) weighted average of known transactions from all points of origin.

Persistent bearishness in the finished steel market has kept Turkish mills only buying scrap on a hand-to-mouth basis. Turkish long export prices fell by $20–40 /t w/w as a lack of demand continues to drive poor sentiment and force mills to reduce their offers. Mills have been seeking discounts on scrap prices, while scrap sellers held offers at the current level.

In the Asian scrap markets, however, offers for H2 increased to $400 /t CFR Vietnam, up by $15 /t w/w. The key driver of this increase is higher demand from India and Bangladesh, while demand in Vietnam stays weak. Bids in Vietnam are being reported at ~$380 /t.

Outlook: Turkish scrap prices will be dictated by steel demand recovery

Turkish finished steel sales and prices are on a decline. Consequently, mills have adopted a wait-and-see attitude towards replenishing their scrap inventory. With high production costs, mills will consider curtailing output if there are no signs of a recovery in demand. This will limit scrap demand and any meaningful increase in its prices. Our base case remains that scrap prices will soften in November, before tighter supply brings support to prices in the winter.

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