Members of Turkey's Association of Flat Steel Importers and Manufacturers (YISAD) came together at a meeting held by YISAD on September 29-30 in Canakkale in northwestern Turkey to discuss the flat steel markets.
YISAD president Tuncay Sergen commented on export, import and capacity usage rate data, pointing out that Turkey and the world is experiencing an oversupply in steel production and that Turkish flat steel mills' capacity usage rates have not managed to exceed 60 percent despite the recent investments made in increasing domestic flat steel production capacity. Mr. Sergen stated that, despite the oversupply, imports have not declined. He added that, while the export volume was rather good in 2011, it will decline in 2012.
The YISAD president went on to say that global oversupply in 2011 was 217-430 million mt, varying from source to source, underlining that Turkey has the advantage of "production being domestically consumed and consumption showing signs of increase".
Mr. Sergen stated that capacity increase in flat steel products produced from scrap instead of from iron ore might do more harm than good, saying, "China is gaining profit margins by using iron ore as steelmaking raw material, while its consumption growth is lower than production growth, which is how current Chinese prices are formed."
He went on to point out that steel mills' profits are shifting to raw material suppliers across the world, adding, "For instance, in 2000 steelmakers were receiving 78 percent of the profits, while this share declined to 35 percent in 2008. However, over the same period, coal producers' share of the profits increased from seven percent to 35 percent and the share of profits of iron ore producers increased from 15 percent to 26 percent."
Sergen underlined China's focus on raw materials investment. "Turkey must look after its natural resources, agricultural lands and water. The profit margins observed globally show that those who have the natural resources will have a say in the future," Sergen remarked.
Sergen advised traders to increase their operations and service quality in niche products, underlining that slitting and cut-to-length services are not enough for achieving sales in the current market conditions, while he recommended that traders should improve their services by keeping stocks for immediate delivery, providing a wide range of products and supplying quality products.