Turkish steelmakers mull alternatives to reduce billet, raw material imports from Russia

The Turkish steel sector has stepped up discussions on billet and raw material imports from Russia, fearing the risk of retaliatory sanction, although sources told S&P Global Commodity Insights that there are currently not many other options for Turkish producers.

“Especially our long steel producers could face sanctions, which are producing rebar from Russian billet,” Turkish Steel Exporters’ Union Vice President Ugur Dalbeler said in an Aug. 25 statement, highlighting that Canada had already started a circumvention investigation into this.

“The US and EU could also join this move,” he said, adding that this could “seriously” harm Turkey’s steel sector.US Deputy Treasury Secretary Wally Adeyemo warned Turkish Deputy Treasury and Finance Minister Yunus Elitas over the weekend that Russian entities and individuals were attempting to use Turkey to bypass sanctions on Russia, with a warning letter also sent to industry and business association TUSIAD on the subject.

One Turkish trading company manager told S&P Global that nearly all steelmakers in the country prefer to buy their semi-product and raw materials needs from Russia as this represents the “best and cheap supply option.”

“I don’t think that Turkey could easily stop trading activities with Russia,” he added.

Turkey’s semi-finished product imports from Russia totaled 1.79 million mt in H1, up 20% year on year on cheaper Russian billet offers, while scrap imports from Russia dropped 62% year on year to 408,000 mt due to the Ukraine war, according to the latest Turkish Statistical Institute data.

One manager at a flat steelmaker said that alternative scrap and billet supply options would be costly and further harm mills’ competitiveness.

However, a Turkish long steelmaker manager said low-priced semi-product imports from Russia were pressuring Turkish finished product prices, meaning that if Russian suppliers stepped back, some of this pressure could be relieved.

Platts, part of S&P Global, assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $402/mt CFR Aug. 24, stable on the day.

— Cenk Can