Turkish rebar exporters fear for their US market prospects following Section 232 recommendations

Friday, 23 February 2018 11:53:37 (GMT+3)   |   Istanbul
       

Turkish rebar export prices have increased by an average of $15/mt during the past week and are currently at $590-600/mt FOB on actual weight basis.

Chinese steel mills, which had left the market due to the Chinese New Year holiday (Feb. 15-21), have not yet fully returned to the market, and so the future trend of Chinese semi-finished and finished steel prices is still uncertain. As a result, international buyers are in no rush to conclude new rebar purchases and are mostly maintaining a wait-and-see stance.

Although Turkish mills have concluded rebar sales to Israel and Yemen for small tonnages, Turkish rebar export sales have mostly been sluggish in the current week. Meanwhile, the sharp price rises recorded in Turkish steel producers’ domestic and export markets have been supported by the upward movement of import scrap and billet quotations.

On the other hand, this week the global steel market has mostly focused on the US Department of Commerce’s Section 232 evaluations and recommendation. The general opinion in the global market is that any one of the three remedy options in US DOC Secretary Wilbur Ross’s recommendation report will negatively impact the global steel trade, while steel sales to the US from several countries such as India, South Korea, Russia and Thailand as well as Turkey will dry up completely. There are three different options in the report presented to Trump under the Section 232 investigation. The first option is the introduction of at least 24 percent additional taxes on steel imports from all countries. The second option is the imposition of a 53 percent duty on steel imports from certain countries including Turkey, Brazil, China, Costa Rica, Egypt, India, Malaysia, South Korea, Russia, South Africa, Thailand and Vietnam and the introduction of an import quota for the remaining countries equal to the volume of their steel exports to the US in 2017. The third and last option offers a quota of 63 percent of 2017 import levels for all countries. In addition, the current antidumping duties will be added to these newly-recommended duties. As President Trump has 90 days to decide on what action is to be taken, the final determination in the Section 232 probe is expected to be announced by April 11.

The Turkish Steel Exporters' Association (CIB) has stated that, if the US imposes one of these recommended measures, the balances in the global steel market will be shaken up and a trade war will be triggered as countries in the EU as well as China and Japan take steps to retaliate.

According to the data from the CIB, in 2017 Turkey’s steel exports to the US decreased by 22.5 percent year on year to 1.83 million mt, with a value of $1.12 billion. As Turkish steel mills’ sales to the US - one of their traditional export markets for large tonnages - have declined sharply due to the uncertainties surrounding the Section 232 probe, it is now been mentioned that the US market may be completely closed to Turkey if one of the protective measures in question is imposed. According to market sources, Turkish steel exporters are seriously concerned about this possibility.


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