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US Commerce Secretary Wilbur Ross said President Donald Trump and his administration are considering massive across-the-board tariffs and restrictive quotas following the department’s Section 232 investigation into steel and aluminium imports, released on Friday February 16.
“People expect stressful times ahead. That is not just going to be bad for Turks but also everybody supplying raw materials to them. There will be a war for existing markets. The sales strategies will be more aggressive and, therefore, [steel] prices will be falling. The scrap prices, in addition may be heading down at least until April 11,” a scrap trader said.
He was responding after Ross outlined three potential measures aimed at limiting steel imports on national security grounds: a blanket tariff, targeted tariffs and quotas, or blanket quotas.
The report included a global tariff of at least 24% on steel imports from all countries, with a more targeted tariff of at least 53% on steel imports from 12 countries, including Turkey; and a quota on all countries equal to their 2017 exports to the US. The report also included a quota on steel imports from all countries equal to 63% of their total exports to the US in 2017.
Turkish market participants mostly believe that the report will affect Turkish steel and raw material markets badly, as well as the markets supplying raw materials to Turkey and potentially even the US market itself, Metal Bulletin was told.
“It is likely that the final decision will be close to what was recommended,” a Turkish mill source said. “Turkey had been expecting better. This recommendation is not good for the producers in Turkey.”
“US scrap suppliers will have to focus more on their local markets, but the domestic market consumes mostly premium grade scrap, such as shredded, plate and structural scrap (P&S) and busheling. The HMS grade scrap would continue to come to Turkey,” he said.
“Steel and scrap prices may fall sharply unless Turkey cuts production at very high rates. The US was the last market for Turkey, into which they were selling at high tonnages,” he added.
“The US will import at least 28 million tonnes of steel at all costs. This will push up the prices in the US and therefore, this decision will not last long,” a Turkish trader said.
On the other hand, one international trader was more optimistic about the report.
“I think Trump will find a way to balance the US market and the Turkish market will not be affected much,” he said.
Turkey exported 1.83 million tonnes of steel products into the US in 2017, down 22.5% year on year, according to the Turkish Steel Exporters’ Assn (ÇIB).
The fall in the country’s steel exports into the US continued into January 2018, with Turkey’s steel exports decreasing 83.6%, compared with January 2017, to 42,000 tonnes.