At the "Söz Sizde Çelik Sohbetleri" event, organized by the Steel Foreign Trade Association with contributions from SteelRadar, Tao Bai, General Manager Commercial Administrationof EMR USA, provided key insights into the current dynamics of the industry.
Bai noted that U.S. HRC spot prices, which were around $650 per ton in mid-January, had risen by 35% to $900. He stated, "Extended lead times and supply constraints continue to support the upward momentum in prices. Additionally, if tariffs are imposed on materials from Mexico and Canada—both of which have supplied the U.S. with an average of 350,000 metric tons of scrap per month over the past two years—this trend could strengthen further. While domestic prices in the U.S. have increased by $70-80 per ton over the past two months, the rise in the USEC deep-sea market has been limited to just $30 per ton. This price disparity, coupled with a decline in cargo volumes directed to Türkiye, is challenging the competitiveness of the U.S. deep-sea export market."
"New Opportunities for Turkish Producers in the U.S. Market"
Tao Bai also evaluated the situation from Türkiye’s perspective, stating, "Since the enactment of Section 232 tariffs in March 2018, exemptions granted to certain countries have created imbalances in competition. However, the newly proposed uniform 25% tariff could create new opportunities for Turkish producers in the U.S. market. Over the past two years, 82.5% of imported steel has been exempt from tariffs, while Türkiye's average monthly exports of 28,000 tons accounted for just 2% of this volume. Given Türkiye’s competitive cost structures and strong production capacities, this presents a chance for Turkish steel producers to reposition themselves. The industry, acting swiftly, has already begun making its presence felt in key import hubs like Houston with HRC and OCTG products."
Highlighting that the current U.S. HRC market is driven more by sentiment than fundamental economic indicators, Bai stated, "Research shows that demand from traditional sectors such as agriculture, construction, trucks, and trailers has not responded to price increases as expected, with real demand falling by 10-15% in the first quarter of 2024. While short- to medium-term expectations for imports remain positive, seasonal slowdowns in the summer, currency fluctuations, and the potential loss of momentum in the U.S. economy add to the uncertainty. At the same time, Europe's response to U.S. trade policies will be crucial, as Europe's recovery will significantly impact Türkiye’s HRC exports."
"Sellers Always Aim for the Highest Return"
Regarding the scrap market, Bai pointed out its more flexible nature: "Some sellers prioritize the domestic market, while others focus on exports. Price arbitrage, demand dynamics, and logistical factors play a decisive role in trade decisions. However, one fundamental reality remains unchanged—sellers always aim for the highest return. As the gap between U.S. domestic and deep-sea prices widens, traders are allocating more resources to prepare scrap packages that meet domestic specifications. Consequently, this trend is limiting the supply directed to deep-sea ports. Overall, the U.S. steel and scrap markets are currently shaped more by tariffs and sentiment than by market fundamentals. The sharp rise in HRC prices is being driven by supply concerns and extended lead times, while a notable divergence is emerging between the U.S. domestic and deep-sea export markets. For Turkish producers, the proposed 25% tariff presents a strategic opportunity to regain market share. However, despite the strong short-term momentum, economic uncertainties and seasonal factors will continue to impact market balances."
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