Turkish steel market gripped by bearish 2024 finished steel outlook: Irepas

Market participants voiced a bearish outlook for the Turkish steel and scrap markets in 2024, market sources told S&P Global Commodity Insights during the 90th International Rebar Producers and Exporters Association, or Irepas, conference held in Berlin over April 28-30.

Sources pointed to mills contending with uncertainty around high global interest rates, the threat of Chinese steel and raw material exports and the impact of the loss of major export markets under current geopolitical tensions.
Rebar exports increase in Q1

Despite the bearish sentiment largely shared by participants in attendance at the Irepas conference, Turkish mills have seemingly enjoyed a stronger start in the first quarter of 2024 compared to the same period in 2023, according to data from the Turkish Statistical Institute.

Turkish mills exported 859,004 mt of rebar in the first quarter of 2024, which was 9.3% higher than exports in the first quarter of 2023, according to TUIK data released April 30.

“The first quarter of this year was much better than last year’s first quarter,” Murat Cebecioglu, export manager at Marmara steel mill Icdas, said. “I think this was due to considerably more sales to Europe, whereas last year Egypt, Algeria and the GCC [Gulf Cooperation Council] were exporting [lots of material] to Europe. This year that did not happen, so we had the room to sell to Europe and did a good volume.”

Turkey exported 87,700 mt of rebar to Romania in the first quarter of 2024, around ten times higher year on year, the data showed.

Other export markets in the first quarter were Albania with 59,800 mt, Ethiopia with 35,800 mt, Northern Cyprus with 35,000 mt, the US with 33,200 mt, Peru with 32,800 mt and Panama with 31,000 mt.

Yemen became Turkey’s top rebar export market in the first quarter at 140,300 mt, as shipments to Israel fell to 67,400 mt, compared with 154,500 mt a year ago amid war the country’s war with Hamas.

Turkey’s March steel output rose 18% on the year to 3.2 million mt/year, according to World Steel Association data, with first-quarter output up 28.4% to 9.5 million mt.

Despite a difficult 2023 due to lower global steel demand, Fuat Tosyali, CEO of major steelmaker Tosyali Holding, said 2024 had started off well for Turkish steel exporters.

“Turkish steel producers are aiming to reach 15.2 million mt steel exports this year, like 2022, with the support of recent rise in steel making capacities in Turkey and expected better demand in global markets as of the second half of the year,” Tosyali said.

The year ahead

One of the main concerns among attendees of the conference was the possibility of increased steel exports from China during 2024. China-based players have already exported 25.8 million mt of steel in the first quarter, up 28.47% from the same period in 2023 when exports totaled 20.08 million mt, according to Chinese customs export data.

In 2023, China exported 90.26 million mt, which contributed to the challenging export market faced by Turkish mills, as Turkish rebar exports dropped to just 3.60 million mt from 5.7 million mt in 2022, according to TUIK.

Many market sources expect Chinese steel exports to once again exceed 90 million mt in 2024, which Turkish mills fear could depress global demand for Turkish finished steel once again.

Turkey-based steelmakers recently called for the government to impose protection measures on Asian steel imports, particularly from China, as dumped and subsidized steel imports from these countries continued to harm the domestic market, the Turkish Steel Producers Association said in February.

Increased expectations that global interest rates would remain higher for longer also weakened sentiment in the Turkish steel markets, as participants expected steel demand to remain slow so long as the global cost of project financing remained elevated.

“The market is under pressure from high interest rates and credit insurance being limited due to lower earnings,” Jens Bjorkman, Head of Trade at Swedish scrap recycler Stena Metal International, said at the Irepas closing panel session on April 30.

Bjorkman said he hoped the European Central Bank and the US Federal Reserve would lower interest rates this year in a move that could “give some energy back to the markets” in 2025.

Panel speakers also expressed concerns about other geopolitical challenges, including the risks faced by transporting cargoes via the Red Sea, which have increased shipment times by 15-20 days, spiked insurance and freight costs, and have encouraged evolution in global trade chains.

“Global trade is becoming more local trade,” F.D. Baysal, President of Seba International Inc said, adding that Middle Eastern economies were slowly becoming more self-sufficient as a result.

The panel also discussed the impact of protectionist policies on demand for Turkish finished steel, namely the US’ 2018 application of a 25% import duty on steel imports of Turkish origin, which has significantly worsened Turkish price competitiveness in the region since.

“These countries [that face a duty in the US] like Turkey have no chance,” Baysal siad. “The only thing that Turkey can do is talk to the government and try to get some concessions with the US.”
Source: Platts