2017 OUTLOOK: Turkish scrap market to recover in 2017 with better demand

The Turkish scrap market showed a degree of recovery in 2016 in line with the rising output from electric arc furnaces (EAFs) and weaker pressure from Chinese participants in the country’s export and domestic markets.
Turkey’s own market participants expected this recovery to continue in 2017 with rising EAF production and stronger demand. 

Review 
Turkey imported 14.16 million tonnes of ferrous scrap in the first ten months of 2016, which was 7.21% more than in the corresponding period of 2015, according to the Turkish Statistical Institute (TUIK). 

This was principally supported by the increasing EAF output, according to the Turkish Steel Producers Assn (TÇÜD). 

Turkey’s crude steel output from EAF-based production rose by 5.60% year-on-year to 18.05 million tonnes in that ten-month period, TÇÜD said. The value of imports, however, fell by 13.04% year-on-year to $3.17 billion in January-October because of weak prices. 

The USA remained the largest supplier into Turkey in the first ten months of 2016, exporting 2.69 million tonnes of scrap. This was, however, 9.13% lower in than the corresponding period of the previous year. 

Meanwhile, Russia increased its scrap exports into Turkey by 9.77% year-on-year to 2.27 million tonnes. The UK increased its exports by 2.74% year-on-year to 2.04 million tonnes, while the Netherlands increased its exports by as much as 130.94% year-on-year to 1.90 million tonnes. 

Belgium followed with 1.52 million tonnes of exports in January-October, up by 39.83% year-on-year. 

Outlook 
Market participants were generally optimistic for 2017, expecting higher prices, Metal Bulletin was told. 

"Scrap prices in 2015-16 were mostly weak and under pressure from low iron ore and coking coal prices in the global markets. However, scrap prices started to recover late in the year as iron ore and coking coal prices rose," TÇÜD general secretary Veysel Yayan said. 

"There are a lot of parameters that affect prices and consumption, but we expect the positive parameters to be stronger this year. Therefore, increasing demand will generate higher production and consumption," Namik Ekinci, board chairman of Turkish Steel Exporters’ Assn (ÇIB), said. 

"Increasing raw material prices will also push up steel prices in 2017," he added. 

"With [Donald] Trump in power [as president in the USA], there will be more protection for the US [industrial sector] and less scrap will be exported. Turkish mills will have to buy more scrap from the EU [and] European prices will increase," a European scrap supplier said. 

"But the margin squeeze [between scrap and finished steel prices] for Turkish producers will continue," he added. 

"The pricing ideas for deep-sea cargoes are $300 per tonne for heavy melting-grade [HMS] scrap, which is much more than in December 2015, when it was $200 per tonne," a CIS source said. 

"Till the end of March [2016], we saw weak demand and unstable prices, mostly because of Asia. Later, prices and demand recovered and we saw the highest [prices] in May. Prices then plunged sharply and the market weakened, which was followed by a quiet market from June until October without any sharp changes," he added. 

"[In 2017] I expect that the market will be strong enough because of demand in the Asia and Oceania markets, which consume two-thirds of all steel products. The market will also be supported by the US, European and African markets. Total steel output will grow by 1-1.5%," he forecast. 

"As far as I know, Turkish producers are strong against any competitive markets. The Asian market affects Turkey, but Turkish mills have advantages in the European and Middle Eastern countries," the CIS source said. 

"We expect 2017 to be a better and stronger year than 2016 for the scrap industry," a Turkish scrap trader said. 

"Prices and consumption in 2017 will be at levels close to last year and we expect no sharp movements in either direction in prices. They will be steadier than in 2016, we believe," he added. "Demand was weak [in 2016] due to the political and economic problems in Turkey, but this should recover with a better political situation and a stronger lira in 2017."