The earthquakes which struck Turkey and Syria, on 6 February, devastated buildings and cost many thousands of lives. Full reconstruction will take several years.
In the immediate aftermath, all Turkish steel producers, whether located in the disaster area or not, were only concerned with assisting the relief effort. Trading operations were suspended, indefinitely. Transport, machinery, equipment and buildings are being employed to support rescue work in the stricken region.
It is uncertain when steel production and shipping activity will resume in Turkey. The port of Iskenderun, for example, is severely damaged and inbound cargoes, including those of scrap steel, are being diverted. Turkish mills have cancelled sales orders, some declaring force majeure, with no indication when production could restart at disrupted facilities. Letters of credit cannot be presented or amended, in the absence of local banking facilities.
Short-term trend for longs uncertain
Long products, by contrast, saw almost universal negative price movements, month-on-month. This sector, however, is likely to feel the effect of Turkish disruption more quickly than flats.
The demand outlook, however, especially for construction, is weak. High inflation and rising interest rates have stifled new housebuilding works throughout Europe. As a consequence, steel stocks remain relatively high, despite efforts to reduce inventory.
Within the longs sector, beam producers have been most active in pushing for higher prices, with little success.
Distributors are reluctant to replenish stock at levels close to outsell values, amid poor market conditions. Much of their current stock was purchased at the previous peak, in the middle of 2022.
Rising scrap prices have been offset by decreasing energy costs. The enforced absence of Turkish buyers, however, is reversing the trend, causing scrap values to soften. Any effort to raise steel prices on the basis of cost is likely to fail, in the short term.
The necessary reconstruction work in Turkey, once it can start, will alter the flow of scrap and structural material. Local mills will concentrate on domestic works and other regional producers will seek to make up any shortfall. Within Europe, raw materials and rolled steel goods may become less plentiful, and prices would rise.
Post time: Feb-20-2023
