Yusuf Guven: Solutions need to be found for cheaper scrap procurement

During his speech at the SteelOrbis Market Talks Meeting held in Istanbul on May 17 with the participation of more than 300 representative from 166 companies, Helveco Intertrade SA director Yusuf Guven stated that a decline will not be seen in the scrap imports of Turkey, the world's number one scrap importer, while the real problem is cheaper procurement of the raw material.
 
Mr. Guven said that the scrap volume traded globally is 90 million mt, while Turkey can potentially access 60 million mt of the total, while the rest is traded in the Far East and in regional markets. Regarding the discussions about scrap imports playing a role in Turkey's current account deficit, he said, "If it wasn't scrap imports, it would be rebar imports," adding that scrap supplied from the domestic market increased to 9 million mt in 2011 from 6 million mt in 2010, but it would be difficult to meet domestic scrap consumption of 25 million mt with just local supplies. Guven pointed out that Turkey, which has to obtain supplies of at least 300,000 mt of scrap per week, has made the right decisions regarding its scrap purchases in general, also commenting that excessive postponement of purchases only increases the volumes that have to be shipped later. He suggested that Turkey should consider diversification in terms of the regions from which it obtains scrap supplies in order to be able to buy scrap at lower prices.
 
Guven also emphasized that, in terms of price, it is not right to focus on only one source in scrap purchasing policies, adding that, for example, purchase costs from Black Sea countries are increased by the export duty these countries impose on scrap. He cited diversification of scrap grades used in Turkey among the possible options to reduce the cost of scrap supply. Guven underscored that certain scrap grades, which are used particularly in Europe and the US and not common in Turkey, should be considered as well.
 
In addition, Mr. Guven indicated that, despite the increasing supply capacities of US shredded scrap, demand remains quite high and drives prices upward. He added that the US is surprisingly also importing scrap from northern European countries. He added that the US has resumed scrap exports to the Far East and Southeast Asia.
 
In conclusion, Guven underlined that, regarding scrap purchases, it is necessary both to balance the source countries and also diversify the scrap grades used in the buyer country, adding that scrap prices are not defined only by fluctuations in finished steel prices.