Steel sector activity halted by massive earthquake in Turkey’s Iskenderun region
Steel trading and production have come to a halt in the eastern Turkish region of Iskenderun following a devastating earthquake that hit the region on Monday February 6 and put mills in the area under force majeure, sources told Fastmarkets on Tuesday
A quake rated 7.7 on the earthquake magnitude scale struck the Pazarcik district of Kahramanmaras province early on Monday, followed by a 7.6 magnitude quake centered on Kahramanmaras’ Elbistan district. Several other provinces were affected, including Adana, Adiyaman, Diyarbakir, Gaziantep, Hatay, Kilis, Malatya, Iskenderun, Osmaniye and Sanliurfa.
“We are in a state of force majeure. Turkey has already issued a fourth-level state alert and declared a state of emergency in 10 provinces [that will continue] for three months,” an Iskenderun mill source said.
“People from other countries are calling to inquire about letters of credit and logistics. However, there isn’t even an operating bank branch in the area. Everyone is trying extremely hard to save their own or their family’s lives,” he added.
The port of Iskenderun was damaged, and operations were halted as a result of the devastating earthquakes.
According to the Maritime Authority of Turkey, operations at the port of Iskenderun have been halted because of the damage. Other ports in the country are operating normally, however, according to the administration.
Iskenderun is an important port in Turkey for steel imports and exports, as well as raw material deliveries, mostly of steel scrap.
According to local sources, all possible resources at the Iskenderun port have been diverted to search and rescue activities.
Furthermore, cities in the area have been declared off-limits to visitors, and civilian vehicles are not permitted to enter.
“We were unable to conduct a thorough check at the steel plants. Right now, our top focus is saving people’s lives,” another Iskenderun mill source said.
The situation for vessels on the water transporting raw materials to the port of Iskenderun was unclear.
“Iskenderun port ceased operations and diverted all its assets to search and rescue,” a source in Iskenderun said. “Ships are anchored out at sea. They will either wait or be redirected to another port if the buyer permits this.”
Power supplies were also limited and could not be used for manufacturing. Fastmarkets was also informed that there were no staff available at the mills.
As a precaution, state pipeline operator Botas has discontinued the flow of natural gas to the provinces of Gaziantep, Hatay and Kahramanmaras, as well as other districts.
According to sources in the area, natural gas flow resumed to the Iskenderun district on Tuesday.
The steel trade in other parts of Turkey was also very slow, because all of the country’s resources were being devoted to search and rescue activities.
“Unfortunately, this horrific catastrophe has harmed the steel industry in other regions. The steel trade has slowed significantly,” a mill source said. “The phones didn’t ring today in the Istanbul region.”
The state of emergency was declared by Turkish President Recep Tayyip Erdogan. He said that at least 3,549 people had been killed and 22,168 injured in 10 provinces.
According to an announcement made on Monday by Turkey’s Public Disclosure Platform (KAP), stock market trade affecting enterprises in the region, including Iskenderun Iron & Steel (Isdemir), has been forbidden until further notice.
Turkish long steel prices faced significant uncertainty in the near term following the earthquakes, according to Alex Kershaw, senior analyst at Fastmarkets.
“The earthquakes have affected several provinces in the country’s southeast, which is home to around 30% of Turkey’s steel-producing electric-arc furnace [EAF] capacity, equivalent to approximately 11.7 million tonnes [per year] of steel production, according to Fastmarkets’ Capex service,” Kershaw said.
“The majority of these mills [roughly 80%] are long steel producers. Reports suggest that the mills in the region are mostly unaffected but, with the state energy provider halting gas shipments to the region temporarily, while at the same time the port of Iskenderun has been damaged, there will be a reduction in long steel availability for this month at least,” he added.
“This will help tighten the long steel market and support export prices from the country, and consequently we have raised our forecast prices for the near term,” he said.
“Meanwhile, scrap import demand among mills in the region is expected to be damped in the near term, helping to weigh on prices,” he added, “although mills that are not in the affected region may seek increased scrap volumes, to meet the near-term void in steel output from mills in the earthquake-affected area.”