Turkish scrap prices rise above $410 /t into 2023

Turkish scrap import prices increase w/w

Turkish scrap prices have been rising consistently since the end of 2022 and into the first week of 2023. Last week, we were reported two confirmed deals at the level of ~$396 /t for HMS 80:20, which were closed at the end of December. Since then, a total of eleven deals have been concluded for January, which came through to us after the assessment window. These deals are in the range of $408-417 /t for HMS 80:20, indicating a continued upward trend. Taking them into account, the latest price level is at ~$413 /t for HMS 80:20, up by $17 /t w/w and $32 /t m/m.

Scrap prices(1) $/t09-Dec16-Dec23-Dec30-Dec06-Jan
HMS 1/2 80:20 CFR Turkey381381381381396
Shredded CFR Turkey401401401401416
Notes: (1) weighted average of known transactions from all points of origin.

The price rebound was mainly driven by tighter scrap availability and mills’ willingness to pay a premium to obtain material. There has been some increase in scrap demand from mills in anticipation of higher prices, while real demand stays limited by modest finished steel sales. Turkish finished steel price offers have been unable to compete with those from India, China, and SE Asia due to high energy costs and weak demand. Moreover, rising scrap prices led to a $40-45 /t w/w increase in Turkish longs export prices, which further hurt the competitiveness of the country’s suppliers in the steel export market.

Outlook: Turkish scrap buying may halt with slow steel demand

In the near term, despite rising price offers from scrap sellers, limited finished steel sales will restrict scrap demand and further scrap price increases after the current wave of restocking.

An upside factor for scrap prices comes from Turkish electricity costs. The country’s energy market regulator – EPDK – has announced a 16% discount on industrial electricity use, while the cap in the free market has been lowered from TRY 4,800 /MWh to TRY 4,200 /MWh. This should help mills with overall production costs and may allow them to accept relatively higher scrap prices to a certain extent. Still, finished steel demand recovery will dictate the direction of scrap prices when supply tightness gradually eases.

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