Turkey's imported scrap prices decreased in the week of May 1-5

Recession in the global steel market negatively affected imported scrap prices in Turkey

Turkey's import scrap prices continue to be affected by the downturn. In the week of May 1-5, 2023, Turkey's import scrap prices decreased by around $20/t.

Weak steel demand in China, as well as higher mill production rates, high scrap flows in the US and the continued decrease in steel demand have all contributed to the decline in Turkey's import scrap prices. Prices are expected to continue falling until mid-May.

According to foreign sources, US HMS/1 scrap east coast port purchase prices were seen at $293 a ton the other day. These prices are not yet considered as the bottom and the expectation is still for a decrease.

Central Bank restricts USD

The Central Bank instructed Turkish banks to limit the amount of USD for purchases and sales on interbank markets in May. The spot market rate paid by Turkish steel mills reportedly remains at a premium to the interbank rate.

The difference in scrap and rebar prices is lower than expected. According to the bank and market exchange rate differential calculation, Turkish steelmakers are quoting a price of TL14,700 (including VAT) for rebar. This price offer is lower than $638.90 in the market. The interest rate, calculated at 3 percent, is higher than bank interest rates.

Turkey's foreign trade deficit widened in April

According to official data, Turkey's foreign trade deficit stood at 6.15 billion dollars in April 2022. In April this year, Turkey's trade deficit widened by 44% y-o-y to $8.85 billion.

The earthquakes in southern Turkey in February, followed by the Ramadan feast in April, took their toll on much of the country's export activity. In April, the country's exports decreased by 17% and imports by 4.5%.

Turkey's crude steel output expected to increase this year

According to forecasts, the country's crude steel production will increase by 4% this year.

US and European markets are expected to weaken. In this case, the gap between US/European domestic scrap prices and Turkey's imported scrap prices is expected to narrow.