On Thursday, May 31, the Trump administration announced its final determination regarding the 25 percent tariff on import steel imposed within the scope of the Section 232 investigation, canceling the exemptions for its NAFTA partners Canada and Mexico as well as for the European Union (EU) countries. The announcement was greeted with astonishment and received negative reactions from many countries, while scrap suppliers which usually make sales to Turkey were observed to become hopeful after the announcement. Since Turkey was not one of the exempted countries, despite the price advantage it provides, Turkey’s steel exports to the US had come to a halt in the period of temporary exemptions, while finished steel sales to the US from the other abovementioned countries increased. However, with the other countries losing their exemptions, Turkish mills' competitive power has increased and they have once again gained an advantage particularly over US mills. As a result, players in the Turkish steel market are observed to be more optimistic. Having experienced difficulties in their domestic sales due to Ramadan and the snap election to be held on June 24, Turkish finished steel producers started negotiations with US buyers right after the Trump administration's announcement, and SteelOrbis has been informed that Turkish mills have already concluded a sale to the US.
Having reduced their prices to Turkey in previous weeks amid the weakness of demand and also due to the downward pressure put on prices, most scrap suppliers have maintained a wait-and-see stance in order to monitor the Turkish finished steel market. Given their higher offer prices to Turkey, US scrap suppliers for a long time did not conclude sales to Turkey but, with scrap inventory levels rising to very high levels at US eastern ports, US suppliers have returned to the Turkish market. However, the big difference between prices of cut grades and shredded scrap in ex-US scrap deals to Turkey is worthy of note. In the deals concluded in Turkey at the beginning of the current week, ex-US HMS I/II 80:20 scrap was at $340-342/mt CFR, while shredded scrap was at $355/mt CFR.
In May, Turkish mills’ demand for deep sea scrap was slow as they focused on short sea scrap purchases. Short sea suppliers are usually preferred by Turkish mills in hard times due to advantages in terms of tonnages, prices, logistics or payments. Accordingly, short sea scrap suppliers met Turkish mills’ lower price expectations in May and concluded many sales to Turkey. Meanwhile, short sea scrap suppliers have also been maintaining a wait-and-see stance as their inventory levels are now at more acceptable levels after the sales concluded to Turkey and also due to the expectations of a positive impact of the Section 232 decision on Turkey’s steel market. SteelOrbis has been informed that short sea suppliers’ strategy for Turkish steel producers will be determined in line with demand.