We talked with İhsan Oğuztüzün, sales and marketing specialist at Turkish steel producer Ege Çelik, about current situation and expectations of liquid steel producers.
Can you give our readers some information about your activities?
Ege Çelik Endüstrisi Sanayi ve Ticaret A.Ş. was established in 1986 in Turkey’s Aliaga region and provides high grade products and services for its customers with its 2 million metric tons of liquid steel capacity and 1.2 million metric tons of rebar and bar-in-coil capacity. Ege Çelik is preferred by its customers and partners in the Turkish domestic market as well as in the international markets for its billet, rebar, bar-in-coil, industrial gas and also for its port and warehousing services. While continuously giving the utmost importance and care to the environment at its steel plant and rolling mill, Ege Celik reaches its customers by road and sea transport through the most advantageous domestic logistics connections and from the Port Operators Association of Turkey’s port in the Aliaga region.
Our aim in production is to always fulfill the terms of national and international standards as well as the conditions of contracts signed with our customers, adopt prospective changes, continuously develop in line with new targets, be successful in all market conditions by enriching our product range, protect the environment, and be competitive with an economical but quality production policy.
Our goal of happy customers makes it easy to work with us since our policy is to understand the needs and wishes of our customers, provide new and improved competitive products, be a trustworthy producer, share our goals with our customers to reach our common targets, and be reachable for our customers at all times.
Can you share some further information on your product range and capacity?
Ege Çelik can produce bar-in-coils/wire rod in dimensions of 5.5-18 mm in its Aliaga plant as well as square billet with dimensions ranging between 100 mm x 100 mm - 200 mm x 200 mm, and also 8-32 mm rebar. Amongst the 5.5 mm-18 mm bar-in-coils/wire rod, there are low-carbon steels suitable for the production of cold drawing and thin diameters, welding electrodes, gas metal arc welding wire, rope and springs, connectors such as screws, bolts and studs, prestressed reinforced concrete wire, and bead and tire wire. Construction steels are produced according to BS (CARES), TSE, DIN, ASTM and JIS standards. Products are distinguished based on their casting; every casting is identified by a number, and so can be monitored as far as their stages of use. Product grades are guaranteed by this casting number for our customers with a certificate. Meanwhile, square billets are produced according to TSE/DIN, ASTM, BS and JIS standards for construction activities.
We know that capacity utilization rates have decreased due to the current market conditions. How much do you use of your own capacity?
We had been using two out of the three of our arc furnaces until the 2008 economic crisis, keeping one in stand-by position to be able to fulfill our commitments completely if a technical problem occurred at the other furnaces. After the 2008 crisis, we stopped the second furnace and also deactivated one of our two rebar rolling mills. Against diverse market conditions, such as the 2015 Chinese incursion, we adjusted our furnace usage rates and tried to keep pace with the market conditions. On the other hand, at the beginning of 2018 having perceived the potential saturation of the rebar/real estate market, we deactivated our rebar rolling plant in April that year. Currently, production at one of our electric arc furnaces is continuing, while one of the remaining two is on stand-by, with the last one once again under construction. Our wire rod and billet production and sales are continuing uninterrupted.
How do you view demand in your target sectors?
With our target sectors being the ones using various wire rod products, demand is still strong. Despite the negative sentiment in both domestic and international markets, demand is still promising. If the quality of the product is above certain standards, we believe demand can easily be sustained.
In terms of price trends, how do you think 2019 will end and the first quarter of 2020 will start?
Having remained stable in spring and summer this year, prices fell sharply at the end of the summer season, followed by a slight rebound. We believe this rebound will end with a very slight adjustment. However, we hope the production of supply in line with demand will prevent any dramatic movement. We believe that the first quarter of 2020 will not be so different from the last quarter of 2019.
What changes have you encountered due to the shrinkage observed both in domestic and export markets?
With the shrinkage in our product range being relatively smaller than in other product markets, our sales have not encountered a big decline. On the export side, we have observed that sales destinations have changed.
How have protectionist measures, particularly the US duties and EU quotas, impacted your company’s steel trade and also Turkish steel trade in general?
The process started with the US President Donald Trump imposing 25 percent duty on steel imports from all countries, excluding a handful, in the name of national security. This caused concerns of steel flow to the European Union (EU). Hence, EU countries preferred to impose a quota system to handle the risk. Turkey’s trade with the US came to a near halt with the US doubling the duty on Turkish steel imports to 50 percent. We have also observed production cuts and decelerations after the exhaustion of the EU quotas ahead of time.
With the loss of traditional markets, which alternative markets have you turned to?
Following the loss of our traditional markets, we have turned to alternative markets. However, all markets - big and small - have become targets for exporters. It is possible to say that Latin America and Africa (mainly north, east and west) are some of our alternative markets.
Do you have any new products or grades you plan to add to your product range?
We last produced tire wire 15 years ago. We have now entered the list of approved suppliers of a European tire producer. We do not have any other plans for a new product. Currently, Ege Çelik aims to improve its product quality above international quality standards.
If you have any investment plans - even if not under the current market conditions but for the future - can you share them with our readers?
Currently, we are continuing reconstruction works at one of our electric arc furnaces. Our aim is to complete this process quickly and continue working in line with our mission aiming at higher quality.