Turkish steel producers continue to halt scrap purchases after seeing a significant rise in their production costs as a result of the new year increases in energy prices.

Turkish mills were expected to resume scrap purchases for February shipments this week, but instead remain sidelined due to the fresh energy cost rises.

A Turkish mill tells Kallanish: “All mills are re-calculating their conversion costs from scrap following the new energy prices. I don’t think any mill would accept $460/tonne cfr levels for premium HMS 1&2 80:20 after today. I believe all mills are working below their planned production levels.”

Mills have increased their rebar quotes to $710/t fob Turkey on the costlier energy. Demand, however, is almost non-existent. In the domestic market, although mills’ official offers are mostly at above $700/t ex-works, some producers are seen decreasing to $685-690/t levels due to weak demand.

“Mills will initially want to see how things will proceed with finished steel sales following the price rises,” says another Turkish long steel producer. “I am not expecting to see much activity in the scrap market this week. I’ve heard that some smaller mills are buying billet rather than scrap.”

Although some European suppliers are offering material in the market, most scrap suppliers are also following a wait-and-see stance amid Turkey’s silence.

Despite their ongoing need for February-shipment scrap cargoes, Turkish mills are expected to exert higher pressure on scrap prices after the recent increase in their production costs. US and Baltic suppliers, however, are seen targeting to sell February-shipment HMS 1&2 80:20 at above $465/t cfr Turkey.

A Baltic-origin scrap supplier is heard offering HMS 1&2 80:20 at $468/t cfr.

A UK-origin scrap cargo was offered at $461/t cfr for 20,000 tonnes of HMS 1&2 80:20, and $485/t cfr for 10,000t of shredded and 10,000t of bonus. It was heard booked on 30 December at $456/t cfr for HMS 1&2 80:20, $476/t cfr for shredded and $481/t cfr for bonus. The buyer is seen to have paid a higher premium for shredded and bonus grades. 

There was also a rumour of a US-origin sale at $463/t cfr for HMS 1&2 80:20. However, this was not confirmed by the time of publication.