On February 6, a disastrous 7.8 magnitude earthquake hit Turkey, with the epicenter in the Pazarcık district of the southern province of Kahramanmaras, severely impacting 10 neighboring cities and resulting in massive casualties, a humanitarian catastrophe, infrastructure damages, and massive logistical disruptions in the affected areas. The southeastern region of Turkey is also home to several large steel producing facilities and is one of the Turkey’s main regions for the steel trade. Given the severe consequences of the earthquakes, market players are trying to assess the actual damage done to mills and the possible outcomes for business.
In Turkey’s Iskenderun region several steel producers are located, such as Isdemir, Koc, Bastug, Ekinciler, Toscelik, and Yazici. Flats and longs re-rollers are also in the region, with Tosyali Toyo, Atakas, MMK Metalurji, Corbus and Yolbulan being among the largest. According to SteelOrbis’ estimation, the Iskenderun region-based steel output accounts for 25-30 percent of Turkey’s total annual volume. For now, there is a lack of information regarding the state of steel producing assets as most mills are trying themselves to assess the possible damage and consequences. At the same time, a lot of market players do not expect most facilities to be seriously damaged as such structures are usually quite strong. “The key issue today is the people, the workers. They need to be found, rescued, assisted. Some of them have unfortunately been lost. A lot of them are basically on the street. So, this is the focus for now,” a source said.
The humanitarian situation in the region has also been aggravated by the cold weather and damaged civilian infrastructure. Particularly, state-run Botas announced that it has cut gas flow in several affected regions due to safety issues, while works on pipelines continue. Electricity supply is also disrupted and it may take a while to secure even coverage and distribution for the population, not even mentioning industries such as steel. The impact on logistics in the region is also expected to be long-term, given closed and destroyed roads and highways and damaged sea ports. In particular, there has been information about the closure of Iskenderun port, which is one of the largest in the region and also about partial damage to Yazici port.
Most market players agree the situation needs time to gain clarity and to see the effects on the steel sector, but it is mainly believed the operations of mills in the region will be disrupted for a while, given the humanitarian, infrastructure and logistical impacts. “I think we have to see what the effects of this earthquake are. Are the ports damaged? Are the mills damaged? Will they cancel any scrap deals? Will there be force majeure?” a trader commented. Others assume that operations may be restored once logistics are fixed, though they admit that the main focus will certainly first be to tackle the humanitarian catastrophe and to help the people. “If they fix the roads, the ports will restart working. Currently, they are evaluating the state of berths, then they will give precedence to ships with aid. The regular vessels are anchored and waiting, as far as I know. For now, this is the situation,” another trader said. In addition, it is believed that regular vessels, including those carrying steel and raw materials to the region, which are approaching or are already at local ports, may have to be redirected to other mills or may have to wait in the Iskenderun area if force majeure is announced.
On February 7, Turkey announced a three-month state of emergency for the 10 earthquake-hit provinces in the country, which will allow the government to control all works and operations even in the private sector so that it can speed up relief work. As a result, according to sources, it may mean all heavy machinery may be moved to residential areas instead of being used at ports or mills.