The last import scrap deal done in Turkey before the joint US-Israel attack on Iran has been shared with the market today, March 3, with prices in the deal slightly higher than expected. The attack which began on February 28 has created significant uncertainty in the region. While market sources believe that Turkey has developed some resilience to such developments in the region, there is also increased caution among Turkish steel producers as they wait to see what happens to their previous contracts.
The ex-US West Coast booking was done on Friday, February 27, by an Izmir-based Turkish steel producer, with the price of HMS I/II 80:20 scrap at $374/mt CFR and shredded scrap at $394/mt CFR. The total tonnage is believed to be 42,000 mt. This level is $3/mt higher than SteelOrbis’ previous estimations for ex-US East Coast HMS I/II 80:20 scrap prices set at $370-372/mt CFR. This range will be revised to $374/mt CFR, not directly because of the ex-US West Coast deal but rather due to the anticipated increase in oil prices against the backdrop of the latest war.
“We shall monitor the situation in Iran very closely. Since we are not sure how long this war will go on, it may have a positive impact on prices. But if it is cut short, it will also mean a price correction very quickly,” a source at a major mill commented today. A source from another Turkish mill added, “We are trying to understand the real impact today, and how long the effects will last.”
A war in the Middle East typically triggers immediate and far-reaching economic consequences. The most significant impact is a spike in oil and natural gas prices due to fears of supply disruptions, particularly on critical routes such as the Strait of Hormuz. Higher energy costs feed into global inflation, raising production, transportation and food prices. At the same time, supply chains may be disrupted if key shipping routes like the Suez Canal or the Red Sea are affected, increasing freight and insurance costs. Overall, such conflicts tend to slow global growth, increase inflationary pressure and heighten financial volatility worldwide.
Under the current circumstances, the prolonged lack of demand for Turkish steel products is now a bigger problem for Turkish mills as their raw material costs may increase. Having said that, Turkish mills will have to complete their deep sea scrap purchases for March and then start to buy for April shipments. SteelOrbis estimates that the latest war in the Middle East will have an indirect positive impact on prices at first. The reaction of Turkish steel mills to increased prices will be monitored closely.