Jun 10 2022
Depreciation of the Turkish lira against the US dollar hit demand in the Turkish domestic long steel market, while Turkish mills' rebar offers in the export market have come under pressure amid falling scrap prices, mill and trading sources told S&P Global Commodity Insights June 10.
Platts assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $425/mt CFR on June 9, down $4/mt on the day. The assessment has fallen $225/mt since reaching $650/mt CFR on April 11, according to S&P Global data.
Some Turkish producers, who are facing higher energy costs since June 1, have halved their production capacities, while others are mulling shutting down for short periods of maintenance, sources said.
A major long steel producer in Turkey said his company had halved working hours at its melt shop and was contemplating pausing output if the sluggish sentiment persisted, while another steelmaker said his company was implementing short output breaks, depending on market conditions.
A trading company manager said a large producer in southern Turkey had taken a week-long maintenance break, but production was expected to restart from June 13.
"Another producer in our region is also expected to start maintenance in the coming weeks, due to the market slackness," he said.
On June 1, Turkey's energy prices were raised sharply with the state gas distributor Botas saying natural gas prices had gone up by 30% for residential use and 10% for industrial use. The Energy Market Regulatory Authority, or EPDK, also said that electricity prices had gone up 25% for industrial use.
A further rise in electricity costs is expected in July, with the EPDK due to change the method of calculating electricity prices for industrial use from July 1, which could increase rates by as much as 71%-86%, according to some sources.
Workable levels for Turkish rebar in the export market continued to soften, as buyers held back amid weakening scrap prices. Platts assessed Turkish exported rebar down $5/mt on the day at $735/mt FOB on June 9.
Workable prices could fall further in the coming days amid a decline in imported scrap prices, a service center manager said June 10.
A scrap cargo from the EU was heard to have been booked by a large Turkish mill at below $400/mt CFR, further pressuring prices, an industry source said June 10.