Turkish steel mills’ exports to the US had come to a halt amid the crisis between countries resulting from the detention of Christian pastor Brunson, and also due to US President Trump’s decision to double Section 232 tariffs on steel imports from Turkey. After pastor Brunson sent to the US over the weekend, Trump has tweeted that the relations between the US and Turkey has recovered. Those tweets in question have led to an expectation that US may reduce the duties on import steel from Turkey back to 25 percent. The US has not made an announcement to confirm this expectation yet, though some market players in Turkey have maintained their optimism, stating that they are waiting for tariffs to be revised to normal levels in the short term. On the other hand, some market players remind that Mexico and Canada have been expecting the same outcome from the negotiations of the USMCA trade deal which has not realized yet, adding that the pastor crisis is not the only subject controversial between the US and Turkey, and so the potential of a reduction in the tariffs is low in the short term.
Having been very sluggish for a long time, domestic rebar sales in Turkey have slightly increased after one Turkish steel producer announced its domestic rebar sales prices today, October 16, way below its competitors with the support received from the appreciation of the Turkish lira against the US dollar, which has declined to its lowest since the beginning of August. It is also observed that Turkish rebar export prices have fallen below $500/mt FOB. Although Turkish steel producers have slightly reduced their production rates, they still need scrap for November shipments. While Turkish mills’ demand for import scrap continues, not many scrap suppliers are in the market seeking to conclude deals. Also, Turkish mills are exerting pressure on scrap prices due to their lower profit margins resulting from the declining trend of their finished steel quotations, but they are still experiencing difficulties in finding the price levels they want. In the most recent transactions made by Turkish mills, deep sea HMS I/II 80:20 scrap prices were in the range of $325-328/mt CFR. It is observed that Turkish steel producers’ demand for short sea scrap is stronger, while Russian and Romanian A3 grade scrap offers to Turkey are at $325/mt CFR and $320/mt CFR, respectively.
The normalization of the Section 232 tariffs on steel imports from Turkey is very important for the future trend of Turkish import scrap market since 25 percent tariff would let Turkish mills to meet US buyers’ price ideas easily, letting them to accelerate their scrap purchases. However, due to the current circumstances, Turkish steelmakers are maintaining a cautious stance as regards their scrap purchases due to their slow finished steel sales.