Posted on 30 Nov 2018
Turkish scrap imports have fallen silent this week as mounting concerns over the global trade war and China’s return to the export market put severe downward pressure on Turkish rebar prices, market participants tell Kallanish. Scrap suppliers were, however, more relaxed due to the continuation of supply constraints.
US and European scrap merchants are offering at $315/tonne and $320-325/t cfr Turkey respectively. However, with little rebar demand from export markets and no support from their virtually frozen domestic market, Turkish mills have been forced to lower rebar quotes to $485/t fob Turkey. Various sources indicate that mills would accept $470/t fob for a bid over 10,000 tonnes.
The situation has been compounded by the drop in Chinese steel prices, which has seen Chinese rebar offered competitively in Southeast Asia, a key market for Turkish exporters. One Turkish trader reported Chinese billet offered to Iskenderun at $465/t cfr. This is, however, unlikely to generate much buying interest due to its long lead time, with delivery in March.
“It’s a terrible situation,” one Turkish steel trader says. “Everything is down. Not a single kilo of rebar or billet is being ordered for January shipment.” Following one mill’s decision to suspend production in January, two further major producers have indicated they will do the same. “Working is coming to a stopping point,” a second Turkish trader observes. A major mill is offering discounts for domestic sales above 250t, he adds. “It’s a bloodbath,” is how an international steel trader describes the price pressure.
Various sources say they believe scrap prices will have to come down to around $280/t cfr Turkey and rebar will sink to $450/t fob.
A European scrap merchant, however, says supply constraints are still propping up scrap prices. “The extent of the drop in China has not been reflected on scrap,” he says. “We don’t see the same level of panic because no one is sitting on an overhang of stock.” Chinese prices have stabilised in the second half of this week, so the market must wait to “… see if this is a correction or something more fundamental,” he concludes.
