Turkish scrap prices remain stable on slow trading activity

Last week, Turkish authorities had announced a rise in electricity and gas prices by ~20% for households and ~50% for industrial use. This has lifted steel production costs substantially. Meanwhile, finished steel demand has been limited despite September being a normal restocking period. Market sentiment remains poor with an inflation rate of over 80% and a worsening US-Lira exchange rate. As a result, major Turkish mills are considering extended production cuts if market conditions do not improve.

Outlook: Steel output cuts to undermine Turkish scrap demand and prices

The extension of steel production curtailments in Turkey is very likely, for most of which is electricity-intensive EAF based steelmaking. Moreover, the sharp spike in electricity and gas prices and recent reduction in interest rates has fuelled fear in the market of a further increase in inflation. Even with disruptions in scrap shipments, mills are unlikely to accept the current high scrap prices and prices may come down in the near term.