Turkish scrap market probably saw the writings on the wall when the US announced to double the tariffs on imports of Turkish steel from 25% to 50%. The aftermath of the political driven tariffs saw Turkey’s currency, the Lira, on a freefall and lost 25% of its value against the stronger US dollars in a matter of days.
With the Lira currency at a rock bottom low, scrap metals trading once vibrant in the country came to a standstill with virtually no deals changing hands. Amidst the market uncertainty, some trade sources even expected no fresh deals to be done till the end of August 2018.
As the Lira continued to depreciate since last Monday, the banks were unwilling to open letter of credit, implying that mills and traders alike cannot open the letter of credits or face much delays in getting one for trading purposes.
No Scrap metal trading till September?
Due to a trading standstill, Platts assessed Turkish imports of premium HMS 1/2 (80:20) at 309.75/mt on Thursday, down 25 cents from Wednesday. Despite the low prices, no new trades were heard as sellers and buyers alike seemed to be sitting behind the fences in waiting for better market clarity.
In this frozen state of trading, some Turkish trade sources even expected prices of steel scrap to fall to the $300/mt level for HMS 1/2 (80:20).
Turkey pivots to Southeast Asia
Later in the week, Turkey was given a lifeline provided by Qatar in pledging a massive $15 billion to stabilize its economy and currency. The Lira immediately bounced back to TRY 5.76 against US dollar on Thursday as compared to the TRY 7 against a USD seen on Monday. With new found confidence, Turkey began to change its exports tactics with aims to sell more volumes of steel finished products to Southeast Asia instead of European customers. In fact, a trade source indicated that Turkish mills have been selling large volumes of long steel to Southeast Asian buyers over the past week.
So how this trade tension between US and Turkey will play out remains anyones guess. However, there is something to cheer for regarding the ongoing US and China trade tension. As a new Chinese trade delegation will visit US this week for trade-war talks and lets hope that some easing or perhaps trade resolutions can be generated from this talk to calm the volatile markets.
Source: Freight Investor Services