Scrap prices in Turkey, which were on an upward trend before the massive earthquake on 6 February, have fallen on a fresh deal concluded from the US at the end of last week.

A western Turkish long steel mill is heard to have bought the US cargo comprising HMS 1&2 80:20 at $418/tonne and shredded and bonus at $438/t cfr Turkey.

This points to a significant decline compared to the premium HMS 1&2 80:20 bookings at $424-428/t cfr levels the week before the earthquake.

Scrap suppliers are seen having difficulties gauging the Turkish steel market as all southern mills have suspended production, while some declared force majeure, and all Turkish mills halted scrap purchases after the earthquake. Some suppliers that contracted sales to southern mills have been forced to divert their cargoes to other regions or have been asked to postpone their shipments.

A scrap supplier tells Kallanish: “A further softening is likely in the short term; however, scrap prices will most probably increase again when business starts to normalise.”

Although some market participants expect production halts to last for weeks, others believe mills will resume production in ten days, at the most.

“There is no major damage at the production facilities. Depending on my previous experience, I believe southern mills may resume production one week later,” says the chief executive of a large steel producer in the Marmara region.

Talking to Bloomberg, meanwhile, Veysel Yayan, Turkish Steel Producers’ Association (TCUD) general secretary, said production halts are likely to continue until mid-March as many workers or their families have lost their lives and homes and are struggling to survive in harsh conditions. “Mills have sent their machinery and equipment to assist in rescue efforts. Cranes and some other equipment will need to be calibrated after the work is completed,” Yayan pointed out.

The current uncertainty has put scrap prices under pressure in the Turkish market.

In the rebar market, business activity was still lacklustre on Tuesday, while Turkish mills were offering rebar at $710-720/t ex-works.

Meanwhile, on Tuesday, Turkish government officials asked TCUD for its feedback on the possibility of stabilising rebar prices during the next 3-4 months. 4 million tonnes of rebar needed for the reconstruction of earthquake-hit areas will be provided by the domestic market. This has given hope to Turkish rebar producers regarding the direction of the market.