Turkey’s Ferrous Scrap and Waste Market Outlook Report

Product Description

With a GDP of $761 billion in 2019, Turkey was the second largest economy in the region that year, behind Saudi Arabia. The country joined the Economic Cooperation Organization in 1961 and also became a member of G20 in 1991. However, Turkey is still a developing country, according to the UN in 2019. With an annual output of 35 million tonnes of crude steel, the country is the largest producer in the region. EAFs have accounted for almost 70% of the country’s output on average over the past years. However, that share has shrunk with increased development in blast furnaces over the recent years. Electric furnaces, especially EAFs, take the largest share in the consumption of ferrous scrap in Turkey.

Market drivers of Turkey’s ferrous scrap

The share of the manufacturing sector in Turkey’s economy has been increasing owing to growing industrialization in the country. As industries of finished goods (such as cars and home appliances) develop, end-of-life scrapping will also increase, driving the supply of ferrous scrap. Moreover, with the growing industrial development, demand for steel as the most commonly used industrial metal will increase.

The share of electric furnaces in Turkey’s crude steel output has shrunk over the recent years. Since ferrous scrap is melted and recycled using electric furnaces, the scrap market will shrink as the share of these furnaces declines. Given the higher energy costs associated with electric furnaces, the downtrend is expected to be backed by high energy prices in Turkey.

Turkey reported the first case of Covid-19 in the latter half of March 2020. Not much longer, in mid-April, daily confirmed cases exceeded 5,000 and the country was officially facing a pandemic. To fight the pandemic, the government restricted businesses and ordered nation-wide lockdowns. As a result, the country’s mobility index dropped to around 60%. Thus, Turkey’s real GDP growth is forecast to be around -1%. With the restrictions implemented by the government due to the Covid-19 pandemic, demand for steel products and consequently crude steel will weaken. Moreover, the spread of Covid-19 in Turkey’s export destinations will weigh on the country’s exports.

Overview of Turkey’s ferrous scrap market

About three quarters of Turkey’s total crude steel output is accounted for by the remelting and recycling of scrap. Combined with the country’s massive crude steel output, this creates huge demand for scrap; Turkey imports almost 80% of its domestic demand for ferrous scrap. This has made the country the largest importer of ferrous scrap in the world, importing a large part of its demand from the US. As a result, the country’s net imports have fluctuated between 17 and 21 million tonnes over the past years. However, the increasing supply of domestic scrap and the shrinking share of electric furnaces in crude steel output have impeded the growth of net imports. As the share of electric furnaces in crude steel output is expected to continue to shrink and the domestic supply of scrap is expected to increase, net imports of ferrous scrap are likely to decline gradually; however, the country will remain a top importer.

Breakdown of Turkey’s ferrous scrap market

Turkey’s ferrous scrap market can be broken down using three factors. In the first breakdown, ferrous scrap falls into old and new scrap based on origin; scrap produced during fabrication is called new scrap, while scrap from end-of-life goods is known as old scrap. The second factor divides ferrous scrap into heavy melting scrap, light-weight scrap, black sheet, busheling, and turnings. Finally, in the third breakdown, ferrous scrap is categorized based on its applications and consumers, including producers of crude steel, ferroalloys, and cast parts.

Key players in Turkey’s ferrous scrap market:

• Çebitaş Demir Çelik Endüstrisi A.Ş.
• CER Çelik Endüstrisi A.Ş.
• Çolakoğlu Metalurji A.Ş.
• Diler Demir Çelik Endüstrisi ve Ticaret A.Ş.
• Ege Çelik Endüstrisi Sanayi ve Ticaret A.Ş.
• Ekinciler Holding A.Ş.
• Erege Metal Demir Çelik Sanayi ve Ticaret A.Ş.
• Ereğli Demir ve Çelik Fabrikalari T.A.Ş. (Erdemir Group)
• Habaş Sinai ve Tibbi Gazlar Istihsal Endustrisi A.S.
• İçdaş Demir Çelik Enerji Tersane ve Ulaşım Sanayi A.Ş.
• İskenderun Demir ve Çelik A.Ş. (Isdemir)
• İzmir Demir Çelik Sanayi A.Ş. (IDÇ)
• Kaptan Demir Çelik Endüstrisi ve Ticaret A.Ş.