Weak iron ore prices raise discount hopes in Turkish HRC market

Buyers in the Turkish hot rolled coil (HRC) market have been putting pressure on mills to cut their prices by delaying their purchases, while the sharp decline in iron ore prices observed in the past week has intensified the downward pressure on prices.
 
In the past week, Indian fines with 63-63.5 percent iron content for China have decreased to $135-137/mt CFR from the level of $146-147/mt CFR. The weakness in iron ore prices is expected to continue, while Turkish HRC producers have maintained their price levels unchanged and are sitting on the sidelines observing the market.
 
With demand failing to reach expected levels since early 2012, Turkish market players have started to put pressure on local mills, which have filled their order books by concluding deals in the overseas markets. However, the Turkish steel producers have not been willing to give the requested discounts.
 
Nevertheless, softer demand in the export markets nowadays and the lack of activity from local buyers have strengthened expectations that discounts will be granted. Meanwhile, the decline in Chinese origin HRC prices in the international markets have contributed to a softening in HRC import offers for Turkey.
 
Prices of import materials, which are attracting little interest, and locally produced HRC, are expected to indicate declines in Turkey. Import HRC offers to Turkey are currently standing at $580-640/mt CFR, while domestic mills' offers can be found at $620-630/mt ex-works. Market players estimate that these prices will likely soften by as much as $10-20/mt, though the offers prices may see further reductions if iron ore prices continue to decline and if demand fails to recover.