Competition in international stainless steel markets and Turkey’s position
In 2012, both global stainless steel production and stainless steel consumption in Turkey increased. The fact that usage of stainless steel changes in line with economic developments is proven by the direct impact of the world economic crisis of 2008, with lower global stainless steel production recorded in 2008 and 2009. Meanwhile, in the last three years, world production of stainless steel has shown a steady increase. We must remark that the largest share in this increase belongs to China, which doubled its production in the past three years.
According to information provided by the International Stainless Steel Forum (ISSF), global stainless crude steel production increased by 5.2 percent year on year in 2012, reaching 35.4 million metric tons, and indicating an increase of about 15 million metric tons compared to the production volume recorded 10 years before. In particular, this increase was the result of higher stainless steel production in China, where stainless steel production in 2012 was 16.1 million mt, compared to 1.1 million mt in 2002. In 2012, stainless steel production in Europe, the US and Asia excluding China all showed decreases. In 2013, the decrease in European stainless steel production seems to be continuing, with the financial crisis and overcapacity negatively affecting the regional stainless steel market. In the meantime, despite their downtrend so far this year, European stainless steel prices are still higher than prices in the rest of the world, and this raises the pressure from imports in the region. In the first half of the year, stainless steel imports to Europe increased significantly, while exports from the region decreased. Despite this negative situation in Europe, global stainless steel production is expected to increase again in 2013 on the back of higher stainless steel production in China.
In 2011, Turkey imported 352,498 mt of stainless flat steel, up 7.2 percent compared to 2010. As for 2012, a similar or even higher increase rate was expected at the beginning of the year. In the first four months of the year in question, Turkey’s average monthly imports amounted to 31,000 metric tons. However, after the monthly import volume reached 40,334 metric tons in May, expectations were revised upwards considerably. Yet, the import volume in May turned out to be the peak monthly import volume in the whole of 2012. By the middle of the year, players in the Turkish stainless steel market were expecting total stainless flat steel imports of over 375,000 mt for 2012, but the reality fell short of such expectations. In June, Turkey’s stainless flat steel imports showed a steep decrease of 35.7 percent from May. In the five-month period between August and December, the monthly import volume was just 26,000 metric tons on average. For the whole of 2012, Turkey’s stainless flat steel imports totaled 355,542 metric tons, with only a slight year-on-year increase of 0.8 percent. Moving to the first seven months of 2013, Turkey’s stainless flat steel imports amounted to 267,250 mt, rising by 20.68 percent as compared to the corresponding period last year. This increase trend is expected to continue until the end of the year.
As stainless steel consumption has been rising every year in Turkey, investments for production of stainless steel are becoming more attractive. Commissioned in July 2013 as a stainless flat steel cold rolling facility, Posco Assan TST is expected to meet Turkey’s domestic demand and also to make a serious contribution to the sector and the national economy with new export opportunities. The biggest obstacle facing this investment in meeting most of Turkey’s annual stainless flat steel consumption of 350,000 mt comes from imports of lower priced, ready stock second quality materials. I expect that Posco Assan TST will play a crucial role in the gradual decrease in imports from China, Taiwan and Europe.