Turkish market players discuss Covid-19 impact on scrap imports

Wednesday, 24 June 2020 17:58:56 (GMT+3)   |   Istanbul

On June 23, Emrah Uğursal from Baştuğ Metallurgy, Demirhan Ekinci from Zen Demir Çelik, Mehmet Evinç from Ferme International Trade, and Osman Türeyyen from Metkim Metal discussed the developments in Turkey’s scrap market during the Covid-19 period and the impact that the situation may have in the coming period, during a webinar titled World’s Biggest Importer of Steel Scrap: Turkey organized by Turkey’s Foreign Steel Trade Association and moderated by Murat Eryılmaz, general manager of SteelOrbis.

Emrah Uğursal stated that his company had to postpone the loading of some sales concluded before the pandemic and that it has recorded a 15 percent decrease in sales in April and a 12-13 percent decrease in May even if they never curbed production. Baştuğ Metallurgy is starting to get used to the new normal as of June, he said.

Osman Türeyyen stated the EU suddenly idled operations and that there have been serious difficulties as regards scrap imports from Italy and Spain, while Germany and the Netherlands were affected by the coronavirus situation later. He added that Turkey continues to purchase scrap. Türeyyen also pointed out that the problem which Covid-19 caused in the scrap market is not only on the supply side but also on the logistics side.

Commenting on the extent to which suppliers have been affected by Covid-19, Mehmet Evinç stated that Denmark, one of the EU countries that he represents, has been less affected by the coronavirus, that contracts have not been delayed, but that there have been decreases in the volumes. Stating that the problem of scrap supply is not as bad as they expected amid the slower collection activities, Evinç said that scrap demand has been impacted but that this has been compensated for by the reduced production of the EU, and so Turkey will not be affected a lot.

The fluctuations in scrap prices have been due to uncertainty and any rise in scrap prices should be supported by exports, said Demirhan Ekinci. Expressing his expectations regarding the scrap supply/demand balance and the volume allocated for export in the US domestic market, he stated that the collection volume in the US decreased, but that US production also declined, and that the share of shredded scrap exported from the US to Turkey in total was 35 percent normally, while this increased to 50 percent in July. It created a win-win situation, he said.

Regarding EUROFER’s moves towards further restrictions on steel imports arriving in the EU, Mr. Türeyyen said he does not expect any quotas on scrap exports from the EU, “However, EUROFER has serious lobbying power and there may be some restrictions even if temporary,” he added. He stated that steel producers in Russia have lobbying power as well and recalled that Russia has imposed some export quotas depending on the region. However, he said he does not expect any restrictions on scrap exports from the US and the UK.

The webinar participants agreed that emerging scrap importers such as Southeast Asian countries and Egypt will not impact the scrap volume for Turkey. Especially the scrap volumes from the US to Southeast Asia are from the US West Coast, while Turkey sources scrap from the US East Coast, and so the scrap imports of Southeast Asian countries will not affect scrap availability for Turkey. Emrah Uğursal said that Egypt, a customer of the EU, is of more interest for Turkey, adding that electric arc furnace investments have increased in Egypt, though they do not potentially constitute competition for Turkey in terms of scrap imports.

Addressing China’s becoming a possible scrap importer and the likely effects of this, Mr. Türeyyen said that China has shut down some outdated capacities, while it has been commissioning electric arc furnaces instead, and therefore the country may become a major scrap consumer. However, he added that China will be able to meet its scrap demand with its own scrap generation for the next 10 years approximately, and so Turkey will maintain its position in the scrap market.

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