LME contract navigates 10 years of steel recycling changes

A product specialist with the London Metal Exchange (LME) says the exchange’s S&P Global steel scrap cost and freight (CFR) Turkey trading contract, introduced 10 years ago, has reached that milestone when it is more relevant than ever based on trading patterns involving Turkish steelmakers.

Citing shipping data tracked by Singapore-based Navigate Commodities, Alberto Xodo of the LME says its ferrous scrap futures contract has become a key tool for a 20 million tons-per-year steel scrap import machine and is used by companies along the entire steel value chain.

In a LinkedIn post this week, Xodo credits information collected by Navigate Commodities for portraying a Turkish recycled electric arc furnace (EAF) mill sector that has flipped from being "a short sea to a deep-sea scrap importer.”

In 2005, almost 64 percent of Turkey’s scrap came from short sea neighbors in the Black Sea, Mediterranean Sea and Balkan regions, according to Xodo.

In 2015, the short sea percentage had dipped to 30 percent of all imports while the deep-sea percentage rose to nearly 70 percent. Last year, the trend continued, with Turkish mills bringing in less than 20 percent of their scrap from the short sea regions while the deep-sea cargo percentage rose to 80 percent.

Turkey’s overall volume imported scrap may have peaked in 2021 at 25 million tons, but the nation still brought in about 20 million tons last year, of which more than 16 million tons arrived from distant seaport points of origin.

As outlined by an infographic posted by Atilla Widnell of Navigate Commodities to LinkedIn late last year, Turkish mills have established wide global buying networks involving numerous countries.

Now, Xodo says the Turkish supplier map has been redrawn over the previous two decades.

“The rise [in] deep sea flows into Turkey shows a very clear North Atlantic/European Union corridor to Turkey,” he says.

According to Xodo and Navigate Commodities, in 2015, a combination of the United States, United Kingdom, Germany, the Benelux countries (Belgium, Netherlands and Luxembourg), the Nordic countries (Denmark, Finland, Norway and Sweden) and the Baltic countries (Estonia, Latvia and Lithuania) accounted for about 91 percent of all ferrous scrap deep-sea arrivals in Turkey.

In 2024, that figure is not greatly changed at 87 percent, but with very different weights by exporting country and region. Statistics indicate the U.S. share rose by about 18 percent in 2024 compared with 2015, and by about 600,000 tons.

Rising even by an ever higher percentage were shipments from the Netherlands, doubling from a 2015 volume of 1.2 million tons in 2015 to 2.8 million tons in 2024. Likewise, shipments from Lithuania more than doubled, rising from 400,000 tons in 2015 to 1.1 million tons in 2024,

Geopolitical circumstances, meanwhile, mean scrap provided to Turkey from Russia and Ukraine dropped from 3.6 million tons in 2015 to around 600,000 tons last year.

“Their share of short sea flows has fallen from about 73 percent to about 16 percent,” Xodo says. “This is exactly the kind of geographical reshuffle that keeps the CFR Turkey market dynamic and volatile, and the LME steel scrap futures aim to help firms manage price risk and volatility.”

“In just two decades, Turkish scrap buyers and sellers have lived through a 50 percent-plus surge in total imports (from 2005 to 2024), a structural swing from short sea to deep-sea sourcing, sanctions, export bans, tariffs, currency depreciation, earthquakes and energy price shocks.”

Heading into 2026, there are Carbon Border Adjustment Mechanism (CBAM) and recycled metal trading restriction issues on the horizon.

Xodo refers to the LME futures contracts as a way to hedge risks tied to trading with Turkey for months forward, not just in today’s bid/offer price, and as a way to manage spreads between physical flows (short sea versus deep sea; EU vs U.S.) and the terminal] screen.