Optimism has started to be observed in the Turkish flats markets. The price increases, buoyant demand and diminishing stock levels observed in long products have begun to influence the local flats market as well.
The main reason for the rise in optimism may be indicated as the start of the construction season and the widespread view that the worst of the crisis has been seen. Considering the current iron ore and scrap prices, it is unlikely that flat steel prices will decrease further. Taking into account that the latest slab offer from Ukraine is around the level of $300/mt FOB, many flat steel producers conclude sales with minimum profits or even by incurring losses. In the Turkish flats market, everyone is purchasing only to satisfy their needs. This situation is expected to change following the rising trend of optimism. However, it should be considered that it is hard to foresee very rapid and large price hikes. However, it seems like demand will maintain its current levels till July. As is well known, the sector will switch to a sluggish period as the summer season progresses. Purchasing activities in the sector will slow down in particular due to the holidays in Europe in August and, afterwards, when the Muslim countries enter the month of Ramadan.
Most materials sold in the Turkish domestic market are from Erdemir. Import material prices are not competitive due to taxes. Erdemir is currently offering June production 2 mm HRC at the level of $420/mt for low tonnages. It is possible to hear lower price levels from both Erdemir and large steel service centers for lower tonnage purchases. In the local market sales prices for deferred payments are at the level of $430/mt and above. In addition, it may be sais that an improvement has started to be observed in the automotive sector. The sector has shown some recovery against the background of the recent purchases in the local market, as well as due to the exports concluded to the US in particular.
In addition to all these developments, the possible conclusion of an agreement between Turkey and the IMF could lead the market to show a greater recovery. All steps should be taken in order to ensure the banks provide the market with loans at lower interest. With the conclusion of crises, Turkey is now able to take more energetic and rapid steps as compared to the other countries.
Although current import bookings cannot be compared with last year's bookings, plate and coil bookings have still been concluded for May output. Recently, HRC bookings from Egypt and HRC and plate bookings from Ukraine have been realized. The latest offers given from Russia are at the levels of $380-410/mt CFR for HRC, while for CRC the levels are in the range of $445-480/mt CFR Turkey. On the other hand, offers given from Ukraine for HRC are at the levels of $345-370/mt CFR, while offers for CRC are in the range of $430-445/mt CFR Turkey. Meanwhile, Romanian origin HRC offers are at the level of $410/mt CFR.
We mentioned in our last analysis that Donetsk's offers were at $390/mt CFR in the plate market where demand has not been so strong. For Ilyich production material various offer levels are pronounced in the market; however, the last booking for this material was concluded at the level of $480/mt CFR for June shipment.
As for HDG, local demand in Turkey has been trending strong. In the domestic market, supply difficulty has been observed in terms of finding thin sized materials such as 0.30-0.40-0.45 mm in particular. Local HDG producers' offers for 0.5 mm 100 gr/m² zinc coated material vary in the range of $650-680/mt in the Turkish domestic market. Of course, HDG prices show some variety depending on tonnage and payment terms.
Also, more positive expectations are observed in the southern European market which is highly important for the Turkish flats markets. It is expected that local prices will show an increase of €20/mt in this region. Market players are now waiting with interest to see how long this current optimism will last and what its consequences will be.