In a troubling turn for the Turkish scrap market, prices have fallen below the $370 per metric ton threshold, marking a significant decline that has not been seen since October 2023. A recent deal executed by a European supplier saw the sale of 25,000 metric tons of HMS 1&2 80:20 at $368.5 per metric ton and an additional 10,000 metric tons of bonus grade scrap at $390.5 per metric ton, further conributing to the bearish trend in the market.
The decline in scrap prices can be attributed to several factors, including a downturn in Chinese futures, lower-priced billet offers from Asia, and sluggish steel sales within Turkey. Although imported billet prices had shown signs of recovery after reaching levels of $480 to $485 per metric ton at the end of July, current offers from Asia have reverted to the range of $480 to $484 per metric ton this week, exerting additional pressure on scrap prices.
Market sentiment remains pessimistic, with some suppliers predicting that scrap prices could drop even further, potentially falling below $350 per metric ton for European materials.
Another supplier echoed this sentiment, noting that the recent activity in imported billet business has altered expectations. “If this imported billet business hadn't become active again, I wouldn't have expected $360 per metric ton levels. But now I believe mills will push for the low $360s for European material,” he remarked. This situation is compounded by the fact that many European suppliers anticipate a market rebound in September when the European Union returns from summer holidays.
In the Benelux region, some suppliers have been compelled to reduce their dock prices below €300 per metric ton, $329, due to the plummeting prices in Turkey and the strength of the euro, which closed at $1.097 on Tuesday. However, the inflow of material remains problematic, particularly during holiday periods. Conversely, other suppliers are struggling to gauge market conditions and have temporarily halted their collection efforts.
The challenges faced by European suppliers are not confined to Turkey alone. Recent transactions indicate that the price of European HMS 1&2 80:20 in Egypt has also approached the low $370s. Furthermore, containerized shredded scrap prices in India have decreased by $5 to $7 per metric ton this week, now standing at $402 per metric ton due to weak steel demand and an oversupply of direct reduced iron.
In the short-sea market, suppliers are grappling with the impact of a strong euro and tight supply conditions. They aim to sell at rates above $370 per metric ton for Turkish scrap; however, no mills in Turkey are willing to accept such prices following the latest EU-origin deals. Meanwhile, Turkish rebar producers have also adjusted their offer prices downward in response to weak demand. Current rebar offers to the EU and Yemen are around $575 per metric ton for actual weight and $550 per metric ton for theoretical weight, respectively. In the domestic market, mills have set their official offers between $580 and $605 per metric ton ex-works, reflecting the ongoing challenges in meeting demand.
