Turkey hit by more quakes

Destructive earthquakes have hit southeastern Turkey just two weeks after an earlier duo of quakes caused tens of thousands of deaths and brought down thousands of buildings in the region.

A report by the BBC says earthquakes measuring 6.4 and 5.8 in magnitude struck the same region of Turkey on Feb. 20 that was hit exactly two weeks earlier by quakes reported as 7.8 and 7.5 on the measurement scale.

Although the Feb. 20 earthquakes were not as strong, the BBC reports that “rescuers are once again searching for people trapped under rubble.” According to the BBC, the Feb. 6 earthquakes resulted in 44,000 deaths and a homeless toll of “tens of thousands.”

In the wake of the Feb. 6 earthquakes, the global ferrous scrap sector attempted to gauge the damage done specifically to Turkey’s electric arc furnace (EAF) steel industry, the world’s leading importer of steel scrap.

Much of the destruction and death in Turkey has been assigned to the collapse of older structures (built before relevant earthquake codes) mixed in with cases of some newer buildings that may have bypassed those codes.

Steel mills are unlikely candidates to be structurally weak buildings. The load-bearing needs of housing large tonnage equipment coupled with the unwanted but known possibilities of dealing with hot metal breakouts or similar events mean mills inherently are built on solid foundations with sturdy materials.

Nathan Fruchter of New York-based Idoru Trading and his closest sources have visited southeastern Turkey where the mills are situated adjacent to deepwater ports where scrap and other metallics and supplies can be received directly. Thus, damage to inland infrastructure might have a reduced impact.

As crews again engage in the tragic task of search, rescue, recovery and cleanup, other agencies of the Turkish government reportedly are fast-tracking rebuilding plans. With an election looming, Turkey’s President Recep Erdoğan is promising a swift and sizable rebuilding effort.

The India-based SteelOrbis website reports that the secretary general of the Turkish Steel Producers Association (TCUD) told Bloomberg TV the TCUD’s members stand ready to provide “the 4 million tons of steel rebar required in the next three to four months” to rebuild southeastern Turkey.

In the same interview, TCUD’s Veysel Yayan reportedly pegged the nation’s rebar sector as having 24 million metric tons of annual capacity. He says the country also can produce 18.5 million metric tons of flat steel each year.

As pointed out by Fruchter, when a natural disaster causes a steel-intensive rebuild effort, ripple effects in the commodities market are likely and have precedents.

Since the Feb. 6 quakes (but before those of Feb. 20), metals information and pricing service Davis Index has been tracking a ferrous scrap market in Turkey that initially saw lower pricing but had since rebounded.

During Turkey’s Monday business day—before the evening earthquakes—heavy melting scrap (HMS) loads into Turkey were selling for more than $425 per metric ton cfr (cost and freight), according to Davis Index. That is a rebound from the $414.85 price of Feb. 15, just after some of the initial post-earthquake cargoes had been booked.

Globally, steel and scrap demand in North America, Europe and much of Asia remains muted as the post-COVID-restrictions rebound flattens out and much of the world recovers from energy market uncertainty one year after Russia’s invasion of Ukraine. However, scrap supplies likewise remain stunted, according to processors in the United States and Europe.

To what extent a swift and sizable rebuild in Turkey will cause upward pricing momentum in the steel and scrap market is poised to play out in the spring and summer.