The US Department of Commerce’s recommendations within the scope of its Section 232 investigation have been made public. These recommendations include 53 percent duty on steel imports from certain countries including Turkey.
According to an analysis by Turkey-based Vakıf Yatırım Analiz, if the US imposes duties or quotas on its steel imports which totaled 38 million mt in 2017, the countries which will no longer be able to export to the US are expected to turn to markets with high consumption and import volumes such as Turkey which has weak competitive power and fewer protective measures. The investment analysis company said that, unless world production excluding the US declines, these volumes seeking new markets may disturb the global supply-demand balance, pulling down steel prices.
Vakıf Yatırım Analiz said that the US - the world’s largest scrap exporter and the largest supplier of scrap to Turkey - might need 25-26 million mt of additional scrap supply amid rising production in domestic electric arc furnaces with the recommended trade restrictions coming into force. These trade restrictions may also result in no scrap exports from the US, which could even become a scrap importer. Vakıf Yatırım Analiz went on to say that, considering that Turkey is the world’s largest scrap importer and that 75 percent of Turkey’s steel production is from electric arc furnaces, significant changes might be seen in the raw material markets both in Turkey and globally, and scrap prices could reach relatively high levels compared to iron ore prices.
Interviewed by SteelOrbis, TEB Yatırım steel markets analyst Erdem Kaylı said that, although Turkish steel mills might be able to make up the lost export volumes via alternative markets, with US imports accounting for eight percent of global imports, the protectionist policy of the US may cause a downward trend in global steel prices. He went on to say that it has now become more important whether the production cuts in China will be extended, adding that, if the production cuts in China are not extended, long steel product prices in particular may see a weakening against the backdrop of the Section 232 measures.