Exploring uncharted territory
SteelOrbis Istanbul spoke with Salim Metin, chairman of Corbus Metal, who discussed his expectations for the market in 2011 and detailed emerging markets worth consideration.
Corbus has business activities in several areas. Could you tell us about them?
SM: Our structure includes several companies. We used to have companies active in other industries besides steel; however, we decided to concentrate on the future of the iron and steel industry alone. Nevertheless, outside of this sector, we still have one construction company that deals with small projects.
I worked professionally with several companies up until 1996. From that year, we have been operating the Corbus and Intermet trading companies. We commissioned the mill that we took over in 1996 and named it Nurmet. The name Corbus was created in 2006. NurmetCelik San ve Tic. A.S. is our plant, while Nurmet Ic ve Dıs Ticaret AS runs the trading business with the local market in focus. Corbus-Intermet runs the buying and selling activities on the foreign trade side. We collect scrap in North Africa; however, lately we are not as active in terms of high tonnages as we used to be. We are both producers and traders of scrap, billets and long products. We are also involved in the trading of flat products.
It is of great importance that we are located in Iskenderun, as this region is the shining star of Turkey as regards steel production.
What is the capacity of Nurmet?
SM: We started as merchant bar producers in Iskenderun when we first set up in 1996. We were the only organization producing the entire merchant bar product range at a single plant. These products included angles as well as square, flat bars and beams, and we were the first mill with an ISO certificate. At that time, Nurmet brought a new dynamic to the region with its 150,000 mt capacity.
The mill has been entirely renovated, going through a revision worth $6 millon in order to catch up with technological developments. The current capacity of the mill is over 450,000 mt, with the production focused mostly on rebar. The infrastructure of the plant will be able to handle a capacity of 600,000 mt, while it is currently ready to run at a 450,000 mt rolling capacity for merchant bars and rebar.
Is Africa a new market for you? How do you view the African market?
SM: When we look at the market we see that all the talk is about Europe. However, Africa is a big market and an important region. We entered this market 10 years ago, but with the focus on East Africa at the time. We were working with Sudan, Madagascar, Tanzania and Kenya. We were also present in North Africa, where everybody else is also present. However, there is a lack of security in the more difficult regions of Africa and therefore it is difficult to go there. Even in the safest countries, there can be political chaos, for example in the Ivory Coast.
We have tried to enter such regions. Of course it takes a certain while to see a return for such endeavors. We are present in some of these countries, while in some others we have strategic partnerships. In addition, in some of these countries we also require government support. For instance, we need to use the Coface insurance system which the French and the Belgians use frequently. This allows us to take bigger steps in these markets, as letters of credit are not commonly used. We see that the Chinese and the Lebanese are quite active in the markets that have not previously been accessed by Turkey. However, when these markets buy our material, they tend to prefer us in view of both quality and pricing. The issue of method of payment also plays a role, and if we can use the mentioned insurance system we may become a stronger player in the region.
The strength of the Chinese in the African market can be clearly observed. Their excess cash on hand is used in particular to purchase mines in Africa. This way the Chinese are trying to ease the pressure of the US dollar. The fact that they own their own resources will make them much stronger in the future. All this is a good indication that the economic and political equilibrium of the world is changing. Turkey has many advantages in terms of cultural connections, location and its understanding of trading; it must take advantage of these by actively positioning itself.
How do you see the market in the Middle East? How will the World Cup to be held in Qatar affect the market?
SM: Qatar is a major Middle Eastern country which has no economic bottleneck. Dubai used to be a very positive market previously; however, the recovery there might take up to two or three years. Qatar will make major investments, including grand stadium projects. Producers supported by the government here are balancing their markets and Turkish companies will definitely receive a share from the demand increase in Qatar in the framework of the $100 billion in investments to be made in the 2011-2015 period.
Furthermore, consistent though low activity in Iraq would have a positive impact on Turkey. New mills have been commissioned in Iraq, and so far we know that three of them have come on stream. However, these mills will not be sufficient to meet domestic demand and Turkey will continue exporting to this market. Other Middle Eastern markets will also continue to receive steel from Turkey.
How would you summarize the past year and what do you expect to see in 2011?
SM: Compared to 2008 and 2009, the year 2010 was better in terms of recovery. I believe the markets will not start moving in a positive way before 2013. In this framework, I do not believe 2011 will be an extremely positive year.
Europe appears to be making slow progress on the road to recovery. The situation in the region is not clear and it will continue to remain so until the second half of 2012. Therefore, in 2011 we will keep trying to adjust ourselves to currency fluctuations or the loss of certain markets, in my opinion. In terms of prices, 2011 may be a year with its highs and lows, i.e., with more fluctuations. Elections are also scheduled for this year. We may see positive activity in our domestic markets from Feburary on. Generally speaking, I expect this year to be more or less in line with 2010—still recovering, but not fully healed.