Shipments into Turkish ports resume after the natural disaster while general New Year sentiment improves.
By far the most significant occurrence to affect ferrous trade since the previous report has been the earthquakes which devastated Turkey and Syria on 6 February. According to Supply Management, supply chains will take around eight months to recover from the damage to railway lines, roads, airports and ports and the disruption to logistics and trade in commodities including steel, chemicals and plastics.
The value of the damage is likely to exceed US$ 2 billion (EUR 1.9 billion) and could reach US$ 4 billion, data analytics provider The Smart Cube calculates. It believes the earthquakes will have a medium-term impact on global logistics. Meanwhile, shipping companies have switched the routes of shipments originally destined for the Turkish port of Iskenderun with many preferring Mersin.
NOT TOTAL DEADLOCK
Trade in ferrous scrap in Turkey was initially crippled not only by port closures and infrastructure paralysis but also the transfer and use of cranes and other lifting equipment in rescue and recovery activity. The seven local mills are thought to account for nearly a third of the country’s total crude steel output and exports with production of up to 40 000 tonnes per day. But it was not total deadlock.
According to Fast Markets, a Turkish mill in the southeast of the country but not directly in the affected region returned to the US ferrous scrap export market within a week. In the longer term, required rebuilding in the area will increase demand for steel products.
A contribution from BIR board member George Adams of SA Recycling notes that while initial indications had been for higher scrap prices in January, sheet mill orders did not support the high end of anticipated increases. ‘Subsequently, new steel buyers started to place the expected orders and, with that increase in demand, mills were quick to target more upside in new steel prices. While new steel sales are still being done at lower levels, mills did enjoy enough new business at higher levels to support additional scrap price increases in February.’
Higher deep-sea export prices to Turkey, low inventory and rising finished steel prices are factors that others see as the background for a fourth month of increases in US ferrous scrap. Adams believes the US consumer is resilient and resistant to a market slowdown amid strong demand for vehicles, houses and appliances.
‘Anticipated additional demand caused by the recent US infrastructure bill should help to fuel US construction this year,’ he concludes. ‘All of that may be enough to keep the party going for a little while longer. Time will tell.’