U.S. Scrap Metal Exports to Turkey
Scrap markets have historically been very volatile, often even challenging the level of fluctuation seen in major currencies. With scrap representing up to 70% of steel production costs, the steel industry has to date been vulnerable to such price moves. Scrap has long been a major U.S. export, providing material to be melted in foreign steel mills or made into new paper products. But the strength of the dollar has made American waste pricier abroad, cutting demand in China, Turkey and other markets.
Turkey is the largest global importer of scrap, in 2012 the total amount of scrap metal imports internationally was 108 million tons and Turkey received 21 percent of this. Turkey imported over 19 million tonnes in 2014, the equivalent of 19% of the global scrap trade, from diversified sources spread across the world. In 2015, Turkey’s steel exports declined by 7.8 percent to 16.2 million tons. Turkey, the world’s largest importer of scrap has plans to more than double total crude steel production to 70 million tonnes by 2023.
The U.S. scrap industry was valued at more than $90 billion in 2012, up from $54 billion in 2009 balance of trade, exporting $28 billion in scrap commodities to 160 countries. The U.S. is the largest exporter of scrap, exporting 15.3 million tonnes or 30% of global trade last year. Moves in the US dollar naturally flow through to the global market. U.S. exports of scrap materials have fallen by 36% since peaking at $32.6 billion 2011.
U.S. scrap metal exports took a tumble in 2015, as the strong U.S. dollar continues to weigh on all American exports. Prices of shredded scrap steel have plunged about 18% so far this year and are down 41% since early 2012. The stronger U.S. dollar has been on the rise since late 2014, according to the U.S. dollar index which measures the greenback’s strength against a trade-weighted basket of six major currencies. However, that ascent will not last forever, economists expect to dollar to start to slowly inch down as 2016 comes around the corner.
Turkey is the no.1 importer of U.S. scrap metal, holding 29 percent of the market in 2015. Because of the strong dollar, Turkey has been buying less from the U.S. and more from markets with weaker currencies including Russia and the Ukraine. Year-to-date, U.S. exports to Turkey were up 9 percent. However, that gain follows two years of substantial loss. Exports to Turkey were down 28 in 2013 and 27 percent in 2014.
The steel scrap exports by the U.S. during the month of November 2015 dropped significantly, as per the latest statistics released by the Department of Commerce (DOC). According to government data, the steel scrap exports totaled 874,687 tons during November. U.S. exports of scrap iron, steel decreased 34 percent, from $5.77 billion to $3.81 billion through November 2015. Through November of this year, the top five markets for U.S. exports in this category were No. 1 Turkey; No. 2 China; No. 3 Taiwan; No. 4 India; and No. 5 South Korea.
U.S. scrap exports to No. 1 Turkey decreased $351.47 million, 29.42 percent. This constitutes 22.12 percent of all shipments. U.S. exports to No. 2 China decreased $90.65 million, 12.88 percent. This constitutes 16.09 percent market share. Turkey stopped buying scrap from the U.S. and started buying refined ore products from China, helping to push the price down about 25% in October 2015, and it’s still easing down.
Steel market forecasts for 2016 call for a slight rebound in demand, which could boost depressed scrap metal prices. Recovery is contingent upon consumption increasing in China, where demand and prices have dropped precipitously. The World Steel Association (worldsteel) projects global steel demand to increase by 0.7 percent in 2016 after decreasing by 1.7 percent in 2015. They feel that the market will stabilize in China, and that growth in India will show resilience to the trend of slowing economies globally. In developed countries, recovery for the steel market continues, albeit more slowy.
We at Mylo Trade support long-term business partnerships between U.S. and Turkish firms. We’re also here to connect Turkish scrap metal importers with the best U.S. scrap metal exporters. To learn more about how to grow your U.S. export scrap metal business in Turkey, send us an email.