The Turkish long steel supply chain on Wednesday saw a steep drop in billet pricing, highlighting its growing gap with relative scrap prices as a competing feedstock for re-rollers and electric arc furnaces.
Scrap prices have remained relatively strong for several consecutive weeks, seemingly disconnecting from billet and more broadly iron ore's drop.
Scrap's relative value to iron ore has now surged to new highs: at 3.28:1 Tuesday, using Turkish delivered scrap prices and Platts IODEX 62% Fe fines, each adjusted for iron content. The metric has moved up from closer to 2:1 earlier in the year.
The Platts Turkey ARC Scrap 30-day index was at 0.79%, up from 0.71% on Tuesday and compared with 1.34% in relative strength over rebar and billet a week earlier.
The Turkey ARC Billet 30-day index plunged to minus 2.46% Wednesday from minus 0.61% Tuesday and close to neutrality at 0.08% marked a week earlier.
Billet's relative price strength continues weaker than scrap's with low iron ore prices and imports of semi-finished and long steels hindering demand for material from producers in the Commonwealth of Independent States.
The Turkey ARC Rebar 30-day index was showing 1% relative strength over its two peers on Wednesday, up from 0.01% Tuesday and reversing from minus 0.67% a week earlier.
The degree over and below zero marks the commodity's price deviation, and relative strength or weakness, from the 30-day and 60-day average price relationship for the three-product group, based on the Turkey ARC analysis.
On a 60-day basis, the Turkey ARC indexes showed scrap at 2.85%, billet at minus 4.17% and rebar at 1.22%, with billet the weakest of the three over the long-term indicators.
The key rebar/scrap spread was at $138/mt Wednesday, close to recent low implied melting margins, on scrap's resilience to return back to earlier lows.
The latest $138/mt spread compares to $180-plus margins enjoyed by EAF mills earlier in the year.
Rebar's margin over billet CFR Turkey basis was at $58/mt, with conversion margins for re-rollers improving on supplies of repriced regional billets.
