Weak steel demand weighed on Turkish scrap prices

Turkish scrap import prices decreased w/w

Last week there was some buying activity in the Turkish scrap market after no trades took place during the week prior. These new deals were done at lower price levels amid persistent weakness in the finished steel market. Our assessment for HMS 1/2 80:20 dropped for the first time since end-September to $348 /t CFR (-$24 /t w/w, -$20 /t m/m) on three deals.

Turkish finished steel export prices have remained on a downward trend since mid-October. Last week, longs prices fell by $10-20 /t w/w. Although scrap sellers had resisted lowering offers because of limited supply, heavy pressure from depressed finished steel demand weighed on scrap demand and prices.

In the Asian scrap markets, offers for bulk material remained unchanged for a second consecutive week at $400 /t CFR Vietnam for H2 from Japan. There has been no buying interest. On the other hand, offers for containerised material from Taiwan, China fell to $340 /t CFR.

Outlook: Turkish scrap prices likely to stay rangebound

Finished steel demand will stay weak or weaken further into winter.  Seasonality will affect longs demand from the construction sector in many regional markets, and indicators for overall steel demand in Europe show further weakness lies ahead. These factors will continue to limit scrap demand.

However, electricity prices in the spot market have come off peak levels and this will ease cost burdens for EAF mills. Thus, mills may not face strong pressure to push for significant decreases in scrap costs. As a result, scrap prices may stay at the current levels before finding some support from lower supply during the winter.

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