Turkish steelmakers and end-users discuss the market situation in 2017
During the “New Horizons in Steel Markets” 12th Annual Conference organized by SteelOrbis in Istanbul on November 2, in the panel discussion focusing on developments and expectations in the steel-using sectors and among steel producers, Mehmet Zeren, general secretary of Turkey’s Steel Pipe Manufacturers Association (CEBID), stated that in 2016 Turkey’s steel pipe exports totaled 5.2 million mt, rising by 15 percent year on year, adding that the figure is expected to be around five million mt for the current year. He also stated that Turkey’s steel pipe exports in 2016 were mostly supported by the Trans-Anatolian Pipeline Project (TANAP), with pipe supply for the project amounting to 600,000 mt. However, in the current year pipe supplies for the TANAP project have declined, while Turkey has also stopped public investments in drinking water and irrigation projects in recent months. In the first eight months of this year, Turkey’s steel pipe exports showed an increase of eight percent year on year. Turkish pipe exports to the EU increased in the given period, while exports to the US declined due to its countervailing duty (CVD) investigation regarding imports from Turkey. If a favorable outcome is obtained from the relevant ongoing investigation process, Turkey’s exports to the US are expected to regain their former levels, according to the CEBID official. Concerning the antidumping (AD) duties imposed by the EU on hot rolled coil imports from four countries, he commented that, because of these duties, Russia and Ukraine, the most important pipe suppliers among the four countries in question, could seek to increase their sales to the Turkish market.
Meanwhile, Europe’s AD duty on HRC imports from the given countries has had a direct positive impact on Turkey’s HRC exports, as European buyers started to show greater interest in Turkish HRC. In the first nine months of this year, Turkey’s HRC exports increased by 35.5 percent year on year to 1.9 million mt, while 1.5 million mt of these exports was shipped to Europe. The AD duty in question has also negatively impacted Russian and Ukrainian steel pipe producers, since European buyers have been seeking to buy steel pipes from Turkey due to concerns that the EU may also impose AD duty on steel pipe imports on the four countries concerned. As a result, Turkish steel pipe exports to Europe increased by 25 percent year on year in the given period, Mr. Zeren added.
Speaking on the issue of the increases in rebar prices in Turkey, Antalya Construction Contractors Association chairman Deniz Karatas stated that the price of 8 mm rebar, which was TRY 1,780/mt in January this year, had risen to TRY 2,430/mt by the start of November, driving up costs in the construction sector by around 20 percent, with this situation causing unfair competition in the sector. Considering that construction works continue for an average of about two years, there is a considerable cost difference for contractors starting construction of a building in the same area with a time interval of six or seven months, he said. During the current year, costs in the construction industry have constantly increased. Mr. Karatas went on to say that the construction sector wants prices to remain stable, not to fluctuate too much, and that he agrees that running a steel plant is of course very costly and so state intervention is needed in relation to this cost situation. He also stated that in the coming period seven million out of of 21 million buildings in Turkey will be demolished and modernized as part of ongoing urban transformation projects, adding that all players in the construction sector should be prepared for this.
Meanwhile, Ömer Faruk Bayhan, sales and marketing director of Turkish steelmaker Çolakoğlu Metalürji, spoke regarding the slight downtrend in flat steel prices seen recently. “We have seen a slight weakening of demand as well as price declines in the Turkish flat steel market recently. This downward price trend is mostly related to price declines in China. From mid-September up to November, domestic flat steel prices have declined by six percent in Europe, by three percent in China, by ten percent in the CIS and by six percent in Turkey. The declines seen in raw material prices have also played a role in the downward trend of global flat steel prices in the given period, with scrap prices decreasing by 13 percent, iron ore prices declining by 21 percent and coking coal prices falling by 12 percent. Meanwhile, the reason for the weakening of flat steel demand in Turkey is mostly due to the strengthening of the US dollar against the Turkish lira,” Bayhan stated.
Muammer Bilgiç, managing director of Bilecik Demir Çelik, commenting on the situation in the Turkish steel sector regarding long steel products in 2017, stated, “In 2017, Turkey’s long steel exports moved upwards, while long steel imports declined. This situation sounds good when considering our performance measures. However, it could be better. We are closing this year without achieving any significant goals. Considering the global markets, while POSCO’s EBITDA is at 21 percent, our long steel producers’ earnings are quite low. We say the market is fine, but the measure for whether business is doing fine should be profitability. We have a serious problem in creating profits in our domestic steel industry.”
*This was published on SteelOrbis website on November 3, 2017.