Sandra Unterschwaiger: “Demand will recover eventually”

Thursday, 21 April 2011 16:22:35 (GMT+2)

Could you please tell us about FJ Elsner Trading's operations? What are your supply sources and what are your main sales markets?

FJ Elsner Trading is fully owned by Raiffeisen Bank International (RBI Austria). We are mainly involved in the global buying and selling of steel products and our main products at the moment are hot rolled coils and plates from China. We have also financed three tube mills in eastern Europe. We deliver HRC to these mills, taking tubes and selling them to western European markets.

Also, we have operations in galvanized tube from India to western Europe. Of course, we deliver Turkish material to Africa and we also have a billet department and sell billets mainly from the CIS and also from Turkey. We have offices in Beijing and Miami and we sell steel products to South America, mainly from Turkey and also from China. We also buy flat steel from Mexico and deliver to western Europe. Basically, most of our rebars and wire rods come from Turkey at the moment and most of our flat steel comes from China. Our trading route is like this for the moment and we not only sell commercial grades but also higher quality grades. Also, we are planning to get more and more into higher grades. I can also say that we have a lot of sales to Asia, selling billets, rebars and wire rods to that region.

What is your responsibility in the company?

My responsibility in the company regarding regions covers Turkey, Belarus and Romania. I have been sixteen years with Elsner and ten years in the steel business. I was in agricultural commodities trading before steel.

How has the political turmoil in the Middle East and North Africa influenced your trading activities?

It has not affected us directly because we are not very engaged in these countries. Of course it has affected everybody more or less as there are less quantities sold generally and this makes prices - rebars in particular - far softer.

How do you see the future in terms of demand in the markets where you operate?

What we see and what we hope is that the flat steel markets will recover because they have been silent for some time and buyers have not been purchasing. Hopefully the bottom has been reached and customers will come back to the market. Because the stock situation is not so good in Europe, soon or later they will have to buy.

Regarding wire rods, we have seen that there have been a lot of sales and I think that this will continue. For billets, the situation needs to be observed. It is a fact that Ukrainian and Russian mills have been lowering their prices. Maybe we can see possible prop for billet prices but not too much.

Asian buyers are also still very hesitant as regards purchases, but they will also have to purchase again after a certain point is reached. From what we hear at the IREPAS meeting from the raw material side, there will be not too much of a decline in raw material prices, and that is why we do not think there will be a crash in finished product prices.

You are not active in supplying raw materials. What is the reason for this?

We have never been active in raw materials supplies like other international trading houses, because we are owned by a bank and the banks keep away from and avoid speculation zones, if possible. Raw materials are being traded in big volumes and of course this is a very special field of activity, but we very rarely enter into raw materials except in cases where we are giving financial or on-the-ground assistance to mills so they can purchase raw materials and we finance them on a sixty to ninety-day basis. However, we do not physically buy and sell raw materials.

What is like to be a trading company linked to a bank?

It has advantages and disadvantages. The advantage is you have enough liquidity, which many companies are missing. I can say this is the biggest advantage. The disadvantage is you have a conservative owner, which does not allow you all you need to be an aggressive trader. Sometimes you need to step back from the market, as in the case of raw materials, as mentioned above.

Another advantage is we can provide credit and facilities to a lot of customers in eastern Europe, etc.

After the major earthquake which hit Japan towards mid-March, how will the markets be affected in your view? How do you see the picture for finished steel products in this context?

Two days after the disaster, I received four phone calls from Turkish mills asking, "Do you have any access to the Japanese markets for rebar buyers because we are sure they will have to purchase rebar." As we can see from this example, it will certainly have many effects on the longs and flats markets, but we have to wait and see. This is all we can do now.

Which markets are the most promising ones for you as new markets?

I am not sure if I can call them "promising" but we are seeking alternatives like Sub-Saharan Africa, and also North Africa. We also have a lot of insight into the Asian business and this is what we will try to extend. In short, Africa is the main region on which we are focusing now.

You are also active in southern Europe.

Yes, mainly south and southeast European markets, for example Serbia. We regularly bring long products to our stocks in this country and sell them by truck. We also have financial instruments for the tube markets in the region and bring tubes back to Europe. We also have other trading activities in this country and we are also active with tube makers in Romania and Bulgaria, but we sell all kinds of steel materials to these countries according to their needs.

What is your general view regarding your operations in Turkey?

We are trying to be active in the Turkish market in most of the products of the steel industry. We have gained excellent experience in the last three years in the Turkish market regarding rebars, wire rods and billets. Thanks to the widening of the African market, we will also be focusing more on merchant bars, tubes, etc., in smaller-volume container shipments. We are also trying to take more flat products from Turkey and we will be looking for some projects which may be interesting for the Turkish steel industry. Our company also sometimes sells material to the Turkish market but not in great volumes. We mostly buy from Turkey.

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