A 20% hike in electricity and natural gas prices for industrial use in Turkey is seen threatening the Benelux scrap market and pressuring prices, as Turkey is the largest buyer of Benelux scrap.

Following the 20% hike in Turkish electricity prices last week, Turkey’s Petroleum Pipeline Corporation has also announced an increase of 20% in natural gas prices for industrial use and power plants from October.

Turkish mills, which have already been struggling to sell in the global market due to high production costs hitting their competitiveness, are not likely to improve utilisation following the further cost hikes. On the contrary, further production cuts seem more likely, which would have a negative impact on their scrap demand.

In light of these developments and weak Turkish scrap demand, most Benelux scrap exporters have had a cautious start to the week, keeping their purchases limited. Exporters’ dock prices were pegged mostly at €295-300/tonne ($312-317) delivered on Monday, with the euro standing at 1.058 per $1. This is down from €295-305/t a week earlier.

However, some exporters in the Netherlands were still aggressive in sourcing, keeping their prices at the high end of this range, with some paying €290/t for uncut material.

A Benelux domestic supplier tells Kallanish: “I cannot say that we have seen the immediate impact of energy price hikes today. However, I am sure the reflection of this will also be negative for our market."

Benelux suppliers are now less likely to see the increases they targeted in the Turkish market. The latest sales from the EU were concluded at $368-369/tonne cfr levels for HMS 1&2 80:20 last week.

As electricity prices diverge depending on utilisation rate and time, Turkish mills have no accurate idea about how their costs will be impacted by these hikes. However, market players say there will be a minimum increase of $10/t in any case.

In the Indian sub-continent, sentiment weakened in both Pakistan and India, pressuring prices. This is mostly due to slowed finished steel demand. Amid buyers’ weak appetite, offers for containerised shredded stood mostly at $420-425/t cfr Nhava Sheva levels, down from $427-430/t a week earlier.