[ferro-alloys.com]Turkish steel producers have had a tough year so far. In the first nine months, exports of Turkish finished steel products to the US plunged 50% on the year to 973,000 mt, American Iron and Steel Institute figures show, having fallen foul of President Donald Trump's Section 232 steel import tariffs.

The tariffs, which started at 25% in March, were doubled to 50% from early August when extradition negotiations for US pastor Andrew Brunson -- imprisoned in Turkey since the failed 2016 coup attempt -- hit an impasse.

Distortions in traditional steel trade routes as a result of Trump's tariffs made it more difficult for Turkish exporters to take advantage of a cheaper lira. The Turkish currency has consistently fallen against the dollar, so far this year hitting a low of 6.95 to the dollar on August 13.

A glimmer of hope came early this month. On October 12 The Turkish authorities released Brunson, who returned to the US. Brunson has strongly denied all of the charges against him. The media and Trump himself signaled this could be the start of a more cordial period of understanding between the two nations -- although Trump denied a deal was done to secure Brunson's release -- fueling widespread hopes that the steel tariffs would be trimmed back to 25%. This has, however, not yet happened, leaving market participants uncertain about the rest of the fourth quarter. "We are all waiting to see if the sanctions go back to 25%, that would definitely give a breather to a stressed market," a trader said.

Most industry participants said Turkish mills were restocking construction rebar in sight of an increase in prices and that they were not "rushing" to sell. October mid-point price sank to $499/mt FOB, down $10.25 FOB from mid-September. The talk in the market is that Turkish mills are nevertheless already negotiating with US buyers, building more bullish expectations for the weeks to come.

The Turks have been forced to seek out new markets, but have had limited success. In the last few months traders report that Turkish rebar exports have been mainly redirected to South East Asian countries, the Far East, North Africa and the Middle East after the US, one of their major importers, reduced its finished products orders.

EU countries have continued to import Turkish rebar while keeping volumes below historical levels by imposing safeguards to prevent Turkish steel flooding the EU, after Turkish imports rose 8.52% to 40,930 mt year on year in January-September, according to European Steel Association Eurofer.

Despite Turkey's attempts to find substitute export markets, the steel volume imported by the US has not been absorbed by any other swing buyer.

The lira's persistent weakness against the dollar has also continued to cripple the Turkish economy, especially on the metals front. It is seen as a contributory factor to a 14% hike in electricity prices mid-August by the crude oil and gas pipeline operator and energy distributor Botas. At 1120 GMT, the lira was at 5.49 to the dollar.

Turkish mills have not only struggled with the hike in industrial electricity costs, which has pushed up their rebar production and storage costs, but have also been impeded from purchasing new raw material supplies including steel scrap -- imported from suppliers including in the US -- at affordable prices.

"Scrap prices keep on inching up. Europe, the Baltic region and the Black Sea ones have a rather strong market, so it is hard to buy good quality material with a weak lira," a trader said. Scrap prices have increased by 12.12%, according to Platts data, since the last week of August this year, as a reaction to a weak currency.

Turkish industry participants' sentiment remains fraught. "The situation is complex: demand is low on both the domestic and export side of the business so we are stuck between a rock and a hard place. All we can do is wait, lowering rebar prices is not possible given the costs we have," a source said.

（S&P Global Platts）

• [Editor:王可]