Turkish demolition market has been taken aback by the last week’s fall of Turkish lira against the U.S. dollar and eruption of a trade battle between Turkey and the U.S.
An ominous cloud of uncertainty has spread across the sector following the decision of the U.S. Government to impose tariffs on Turkish aluminium and steel (20 and 50 percent respectively).
Turkey’s President Recep Tayyip Erdogan reacted with boycotting American electronics, announcing retaliatory measures on U.S. alcohol, tobacco and passenger vehicles. To help boost Turkish economy, the state of Qatar pledged a USD 15 billion investment from Qatar.
As a result, reports have emerged that local cash buyers refused to offer for demo tonnage with the huge drop of Turkish Lira and local steel plate prices, brokers indicated.
“Steel markets took a position as pending, and scrap mills refrained from buying for the time being. It is now a case of waiting to see how they will rectify themselves or decrease further against the U.S. sanctions imposed and currency pressure,” Clarksons Platou said in the weekly report.
“The possibility that many ship owners will change their decision to send their vessels for demo in Turkey is now big, while the said import tariffs could add extra pressure on the local market,” Intermodal’s research Analyst George Panagopoulos, commented.
The sentiment is confirmed in GMS weekly report, which indicates that “Turkish recyclers remain fearful & confused, whether to or even what to offer, given the possibility of further declines ahead.”
According to GMS, the world’s largest cash buyer of ships, there has been some stability following last week’s decline in steel prices.
“Local steel plate prices too reported an improvement from USD 250/Mt levels to about TRY 290/MT, an improvement for the week but an overall decline of USD 40/MT from 2 weeks ago,” GMS said.
“But with the onset of Eid and the Turkish market remaining closed for a majority of the coming week, the true extent of the decline in ship prices should become clear in the week(s) ahead – as long as no new sanctions are imposed and / or no further declines in fundamentals are registered.”