No negative impact of Chinese slowdown expected on Erdemir

No negative impact of Chinese slowdown expected on Erdemir

Upon the recent news that Chinese officials will be taking measures to cool off the overheated economic growth in China, increasing the capital requirement to 40% in steel projects, most trading partners of the country had to review their stance and exposures in a case where China significantly halts its purchases of raw materials and steel products. In a statement released following these developments, Erdemir, major integrated flat rolled steel producer of Turkey, explained that it has no serious concerns of a negative impact on its export sales in case China slows down its imports, under the framework of the new restrictions. Company officials emphasized no need for worries as sales into China since the beginning of this year only account to a 2% of total sales of Erdemir. It was also added that no orders from China for the forthcoming period exist. Indeed, China has newly joined Erdemir's portfolio after the recent economic growth experienced in the country. To supply the Turkish market is the priority for Erdemir before exporting material to any country, the officials say. Erdemir prefers to supply the domestic market instead of international markets under normal circumstances, as Turkey is a country where flat rolled product supply is short. If the local demand dips, major export markets for Erdemir are mainly certain EU countries and the US. The current strong status of slab market internationally will also avoid the flat rolled prices from a sharp drop, relieving Erdemir also from such a threat. Erdemir shares fell by 23.5% between the dates of April 26 – May 3. Economy experts' views are that the decline in Erdemir shares is rather related to the expectations of international steel prices to fall, than the Chinese slowdown and is now completed, ready for correction. But still, a cooling down Chinese growth would mean price weakening for all base material suppliers as demand from China was the main driver of high market levels.