US President Donald Trump said this past week that he would revive the 50% tariff on imports of Turkish steel in response to the country's military actions in Northeast Syria.
But the two countries reached an agreement on Thursday October 17, with the US implying that it will refrain from imposing the steel tariff increase if Turkey halts its offensive.
"Once Operation Peace Spring is paused, the US agrees not to pursue further imposition of sanctions under the executive order of October 14, 2019," the White House said in issuing a joint statement with Turkey.
The US Commerce Department and White House press office did not respond to Fastmarkets' request for comment on Friday.
The US had increased the Section 232 tariffs against Turkey to 50% in August 2018 before halving them to the previous level of 25% in May of this year.
Investment bank Cowen & Co expects the latest development to temper US buyers' desire source reinforcing bar from Turkey, given the uneasy US-Turkish relations.
“Volatility and [the] still fluid state of US and Turkey relations is likely to stoke a more risk-off approach among US buyers as they consider alternatives to US supply... As such, we do not foresee an aggressive re-entry of Turkish supply into the US market, which could continue to lend support to rebar spreads in the near term,” Cowen analysts Tyler Kenyon and Matthew Barry wrote in a research note on Friday.
“Turkey's absence this year has essentially been displaced by imports from other countries,” the analysts added. “Should global demand dynamics fail to improve next year, we believe whatever gap is left by Turkey is likely to be made up by other overseas suppliers.”
In recent weeks, the US market has seen aggressively priced offers for Turkish, Italian, Spanish and Portuguese rebar that are well below US prices.
Turkish mills might not be accepting new orders from US buyers for up to the next five days, one rebar market participant said on Friday.
“It’s still a bit early to say but so far the Turkish tariff, on or off, [doesn’t seem to be a] significant factor for the US rebar market,” a second market participant said. “Other countries have been offering lower prices than Turkey anyway.”
“International business has been extremely challenging all year but the added uncertainty of the tariff, and delayed or canceled shipments, should help to tighten foreign [rebar] supply,” this second source added.
Fastmarkets' assessed steel rebar, import, cfr Houston at $517-535 per short ton on October 16, down from $575-590 per ton previously; and steel rebar, fob mill US at $30-30.50 per hundredweight ($600-610 per ton) on the same date, off from the prior level of $30-31 per cwt.
It appears the United States will hold off on levying a 50% tariff on imports of Turkish steel, Fastmarkets understands.