Some Turkish mills struggle for December steel sales, UK scrap bought

London (Platts)–20Nov2013/743 am EST/1243 GMT

A handful of Turkish steelmakers are still looking for December shipment sales of finished steel products and have lowered their valuations this week in order to find clients, as one electric arc furnace booked a bulk scrap cargo from the UK, market participants said Tuesday.
The scrap cargo contains 18,000 mt of heavy melting scrap I/II (70/30 blend) at $371/mt CFR Aliaga and 2,000 mt of bonus material at $399/mt CFR Aliaga from a UK supplier, booked by one of Turkey’s biggest EAFs.

Another cargo, of Baltic-origin, first heard in the market late last week was booked by an Iskenderun-based diversified mill at an average price of $393/mt CFR for mixed grades, although confirmation of the price was not available at writing.

Romanian cargo was also booked at $375/mt CFR recently for HMS I/II (80/20 blend), with some mills in Turkey looking to purchase shortsea cargoes in the absence of competitive US East Coast bulk offers, market participants said.

Platts daily assessment of premium HMS I/II (80/20 blend) wavered to $388/mt CFR Turkish ports, down $1/mt on-day in light of the above market movement.

Scrap sellers are aware now that an arbitrage exists for billet purchases from Black Sea Ukrainian or Russian ports as many steelmakers there have abundant semis supply for December output, and some still have November stock or production to sell, too.

“Turkey’s EAFs could buy billet from CIS and sell their own semis locally to try and fill up their orderbooks,” one steel trader based in Turkey said.

“Turkish buyers must view billets to be a better alternative as supply can reach Turkey at about the same time frame as scrap-buys, which take time to convert into billets,” a second international trader said.

Billet prices from Black Sea ports are hovering around the $500/mt FOB mark, only $113/mt higher than Platts daily landed-Turkey scrap price, according to Platts market data.

The main reason for such weakness in CIS billet prices is due to a slowdown in major offtake markets such as Saudi Arabia, where demand for construction steels has plummeted due to labor constraints.

Despite Tuesday’s market weakness, Turkey’s EAFs are aware that US exporters are likely to come back with strong offers for December shipments as the US domestic market remains firm.

“The US guys will come back with strong offers, as usual, and their offers will dictate the market,” an exporter at a Turkish mill said.