Turkey is the one of the most important countries in the global ERW pipe market and has made its mark in the export business down through the years with its quality and reliability. Indeed, a major part of Turkish flat steel production goes to meeting the needs of this sector. The current upward trend in iron ore prices, and accordingly in flat steel prices, has directly affected the pipe markets and pushed prices up. However, some quarters suggest that the Turkish pipe market may experience more difficult days in the near future. Nowadays, the Turkish pipe sector exports mostly to the EU. Previously, Turkey exported its pipes mainly to the US; however, after the Chinese entered the sector with considerably lower prices, the market in question was lost. Since then, the Turkish pipe sector has been doing business mostly with the EU, but also with the Middle East and North Africa. This situation has been causing concern to the European pipe producers over the last two to three years, and it is known that these producers have been exerting pressure for anti-dumping action against the Turkish producers.
During spring this year the overall European market purchased a great amount of material from the Turkish pipe sector. Turkey's pipe market thereby gained some relief from its less-than-sparkling domestic performance. In addition, the rises in overall steel prices have increased Europe's purchasing activity from Turkey. However, since the week before last, a slowdown in purchasing has been observed, due to the fact that Europe in general will take its summer holiday break in the month of August. Indeed, Turkish pipe producers have not reflected the increases triggered by the rising sheet prices in their own offers. Although Turkish ERW pipe offers have been pushing for the price level of $1,300/mt FOB Turkey to Europe in the past week for small diameter material, no deals have been concluded at this level. Although the offers then entered a downward trend in the latter part of the past week, declining to a range of $1,250-1,270/mt FOB, still no deals have been concluded.
This downward trend may change if sheet prices continue to rise. Buyers who have been frightened by the price increases will again turn their thoughts to purchases of material. However, it is certain that the Turkish pipe producers will continue to do business at low profit margins for a definite period in order to survive in the export market. The pipe offers are not at the levels as they would normally be at, especially since Erdemir production HRC price is currently at $1,360/mt. Also, since the local Turkish market will unlikely see an awakening for a long time, it is thought that the period ahead will be a difficult one for the Turkish pipe producers. However, the rapidly changing steel market with its necessity for swift decision-making has rendered it impossible to make predictions with certainty. For this reason, the sectors which use steel for raw material, such as the pipe, automotive, machine and white goods sectors - all of which are so important for Turkey - must closely follow the steel market on a daily basis and need to proceed with greater caution compared to the past.