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Steel Scrap Market: Turkey, The Game Setter

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by - 1/4/2016 6371 Views

Creating Value for Steel Scrap

Today the Turkish Steel Industry is the world's eighth and Europe's second biggest steel producer, accounting for one fifth of global scrap imports on its own, Turkish steel industry is a key player in the world steel market with the added value it creates as well.

Inspite of the stagnation in the world wide global economy, fluctuations in commodity prices and the cut-throat competition, the Turkish steel sector continues its stable growth. However, in the current period which has seen increased uncertainty, good corporate management of revenues and costs passes through less vulnerability to fluctuations in price. Borsa Istanbul Derivatives Market (VIOP) is now providing the steel industry with the opportunity of managing price risks in a period where fluctuations in commodity prices as well as uncertainties for the real sector are building up. With futures contracts regarding steel scrap opening to transactions as of April, all supplier and user companies operating in the Turkish steel sector have obtained an important instrument to protect themselves against the price risks they are subjected to. Having said this, Turkey being the world's eighth and Europe's second biggest steel producer & accounting for one fifth of the global scrap imports on its own, what kind of picture does the Turkish Steel Industry present us with?

 According to data provided by the Turkish Steel Exporters Association, Turkey produced 34 million tons of steel in 2014, accounting for 2.1% of the global production, thus retaining its rank as Europe's second and the world's eighth biggest steel producer over the last three years. The fact that Turkey has been experiencing a period of fast growth recently has had a positive impact on the brilliant success of this industry, which has increased its production volume by 66% over the past decade. In particular, production in industries that constitute the main areas of use for steel, such as construction, machinery, automotive and white goods, has accelerated, placing Turkey among the decision makers in steel. 

 DRIFT TOWARDS ALTERNATIVE MARKETS IN EXPORTS

 Turkey remains a major key player in the global market considering the volume of its steel production as well as the added value it generates. Despite the stagnation in the world steel industry due to the impact of the global crisis, credit should be given to its competitive structure, the Turkish steel industry has generated revenues of USD 13.8 billion in 2014 with 17.6 million tonnes of steel exported, thus making it the eighth largest exporter of steel in the world. In data by the Turkish Steel Exporters Association, the Middle East and Gulf countries, European Union, North America and North African countries stand out as the largest export markets. Following the global economic crisis, due to reduced demand in the export markets, the Turkish steel export activities drifted from the traditional markets towards alternative markets in the neighboring countries. However, since 2013, despite a fall of 20.3% down to USD 4.2 billion in exports to Middle Eastern countries, the Middle East retained its position as the largest export market for Turkey, as has been the case since several years. Exports to the European Union, which follows the Middle East as Turkey's second largest export market, have in turn increased by 7.1% in value; generating USD 2.7 billion. Exports to North America, the third largest export market for Turkey, have increased by 85.1% in worth in 2014 in comparison with the past year and reached USD 1.8 billion.

MASSIVE ADDED VALUE CREATED FROM  STEEL SCRAP


Three major strongholds stand out among the main production inputs in the Turkish steel industry, which focuses on added value:  Energy, iron ore and steel scrap... Due to domestic resources falling short, the industry meets its needs for raw material by importing steel scrap. According to the 2013 data by the Turkish Steel Producers Association, the industry imported 19.7 million tons of steel-iron scrap, accounting for 70% of all scrap material used in production. The main import markets were the US, Russian Federation, Romania, UK and Belgium.

RISKS WILL BE REDUCED IN THE STEEL SCRAP MARKET

With future contracts regarding steel scrap opening to transactions on Borsa İstanbul, the Turkish steel industry has obtained an important instrument to manage price risks.

Turkey is at the heart of the global scrap material market. With the trading of Scrap Metal Futures Contracts on the Borsa Istanbul Derivatives Market, the Derivatives Market will provide visibility for company revenues and costs. Today, the industry is under stress due to low pricing and the Derivatives Market holds the potential to alleviate such risks. Our TSI pricing for Turkish steel scrap import material is a global measure referred to by companies worldwide. Working with Borsa İstanbul on this project showed us the large potential it has in this industry. For this reason, I think Borsa İstanbul makes a perfect example for us.

Category : Metal

Tags : Steel Scrap, Steel Scrap Market, Steel Scrap Trend, Steel Scrap Price, Steel Scrap Market


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About Georgy Abraham

As the bright morning of 28th May dawned in the year 1972, in the fulfillment of time according to the plan & will of Almighty Godbrought me forth into this world and I was brought up & educated in Orissa. My parents provided me with the best of education in an English medium school with high standa .... more info

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