August is usually a relatively calm month for the global steel markets as most of the main producer countries take an annual summer break. This year, nevertheless, the announcement by the US authorities of the decision to double the import tariffs for steel and aluminium for Turkish products forced many observers to shorten their holidays. There is a sudden need to analyse the effects of the move on the global steel sector.

The first effect of the US announcement was a fall in the value of the Turkish lira, reaching TRY 7 per dollar in mid-August, double what it was in October 2017. During the last days the lira recovered slightly, but it still remains above TRY 6 per dollar. In this week’s edition of the Kallanish Steel Weekly we analyse in more depth the effects of the crash of the value of the Turkish Lira in our feature piece. In this, we consider the views of a leading trader based between Istanbul and London.

In addition to the depreciation of the currency, the scrap market suffered a major fall with the global benchmark falling back to $300/tonne cfr Turkey, the lowest level since November last year. While market observers are speculating that the price could drop further, the correction has already significantly changed the international steel sector.

Iron ore is holding at above $65/t cfr Qingdao meaning that EAF-based producer globally have seen their competitivity improve significantly during the last two weeks compared with integrated producers. Currently scrap is trading at a premium compared with iron ore of only just above $230/t; at the end of August last year the premium had risen above $275/t.