Mr Trump has authorised to double tariffs on Turkish steel and aluminium exports to the US. The tariffs on aluminium are now increased from 10% to 20%, while it increased from 25% to 50% for steel.
The announcement severely impacted the Turkish lira which has already been in turmoil. The currency has now plunged to an all-time low of 6.24 per dollar on Friday, before recovering to 5.94, down 7% on the day. The currency has fallen 30% since the start of the year.
Looking at the steel statistics, the US imported around $1.3 billion worth of steel products from Turkey in 2017 while exported around $1.1 billion value of steel. The deficit is not much greater to bring any significant change. In July the Turkish government imposed tariffs of $266 million on $1.8 billion worth of US goods in retaliation to Mr Trump’s levies on steel and aluminium imports under section 232. We expect that Turkey will retaliate again this time to send strong signals to the market.
Commodity Inside understands that the weak lira is likely to increase the cost of production for steel mills as Turkey is the world largest scrap importer. Turkey is also one of the largest importers of the US scraps, but so far Turkish government has not included scrap on its hit list as that could impact their own EAF producers.
Scrap prices in the US remained lacklustre this month. The weak economic condition in Turkey is also driving scrap process down in the international market. Meanwhile, the US ferrous scrap exports to China in June also declined to a 20-year low, mainly due to the growing scrap pool in China.
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