Sims expects minimal disruption in Turkey

Global recycling giant Sims Metal Management estimates that steel production in southern Turkey could resume by late-February or the first week of March after the region was hit by devastating earthquakes last week.

"The steel mill feedback that I've had from some of the owners is that their work force is intact, the infrastructure is intact, but now the focus is really on the humanitarian, and they expect the end of the month, beginning of March to go back to normal," chief executive Alistair Field said today.

Steel mills in the region, which included one blast furnace and five electric arc furnaces were not damaged by the earthquakes, but production has since been shuttered.

Several mills issued force majeure notices on Friday that sowed uncertainty throughout the market over possible short-term effects on scrap demand and pricing stemming from the loss of production.

Sims said that up until now it has seen a minimal impact on scrap shipments to the country.

So far, the company has been forced to divert two cargoes originally destined for Iskenderun mills to elsewhere throughout Turkey with the status of a third cargo slotted for the region currently under review, according to Field.

The company noted that the port and terminals used by the mills in the region were not damaged and that some mills began unloading scrap yesterday.

"Both infrastructure and the ports are all ready to run and already being used some odd form…but also understand that those ports are also going to take vessels with humanitarian aid into that effected area so those vessels, those ships will take priority," Fields said, adding that mills have supplied equipment for aid, rescue, and through the region.

In the short-term, Sims noted that Turkish mills in other regions of the country can lift capacity utilization, as demolition and clean-up remain the focus of the government, while in the medium-term steel demand could improve following rebuilding activities.

"We are very strong of the opinion that there will be a concerted effort to rebuild the affected areas and that will require obviously a steel industry that will have to step up and meet that requirement…to rebuild and rebuild at probably a higher quality build and therefore more steel," Field said.

Turkey accounted for 36.5pc of Sims' sales volumes in its fiscal first half 2023 year ended 31 December.

Turkish ferrous scrap import prices of HMS 1/2 80:20 fell $9/t today to $418/t cfr the Argus daily assessment following a US sale of a March-shipment vessel to a Marmara mill in northwest Turkey.

By Brad MacAulay