Turkey is the world’s biggest scrap steel importer and a key consumer in the $20 billion US steel scrap industry. But Turkey’s current economic crisis is taking its toll on the US scrap steel industry, the country’s weak demand and declining currency making imports very costly.
The US is the number one exporter of iron and steel scrap, selling $10 billion per year, more than two times the amount Japan sells, second to the US. Turkey has been the number one importer of US scrap since 2008; the country’s steelmaking companies mainly use electric-arc furnaces to melt down the scrap imports. Turkey, in turn, sells to Iraq, Saudi Arabia and the United Arab Emirates, becoming the largest exporter to these countries.
In the first 11 months of 2013, Turkey’s imports dropped 18% to 4.9 million tons, a huge hit to the US scrap steel industry. Turkey is now importing more steel from Europe, and manufacturing steel products from semi-finished steel items purchased from Russia, instead of manufacturing steel from scrap.
East Coast scrap traders are more widely affected by Turkey’s decline, whereas West Coast traders chiefly export to Asia. While demand from Asian countries, such as China, is predicted to continue growing, there is a worry that the demand could dwindle as China has its first “scrap cycle,” a phrase applied to a young, industrialized country that begins producing its own scrap with recycled steel goods. China will remain an importer for now, but the question remains whether China, like the US, will also become a global exporter of steel scrap. The US steel scrap industry has a lot to lose.
Developed and Written by Dr. Subodh Das and Tara Mahadevan
February 24, 2014
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