Ugur Dalbeler: Producers are concerned over lack of demand and pressure on margins from overcapacity

Tuesday, 15 October 2013 12:27:18 (GMT+3)   |   Istanbul

What evaluations would you make regarding IREPAS during the period of your chairmanship?
Time has flown by. My first IREPAS meeting was in Istanbul in 1987. The most interesting thing about the meeting for me was that two people were having a heated discussion. One of them was the moderator, while the other was one of the participants. What makes IREPAS different is that it is interactive and productive. However, there is a significant difference between the concept of IREPAS today and the concept in the past. The biggest reason for this are the changing conditions around the world. Back then, it was as if we were forming a cartel-like structure. It was a gathering for producers operating in the same region to optimize their profits. This kind of thing is now prohibited almost everywhere. So we created a different concept and I believe the result has been very good. IREPAS is trying to enable industry players to establish working communications between each other. To summarize, in the past only certain producers and traders were involved, but now almost all players, including financing banks, logistics companies, raw material suppliers and end-users, are interested in the IREPAS meetings. I am very pleased with how far IREPAS has come and SteelOrbis has made a tremendous contribution to this progress over the past 10 years. I would like to extend my gratitude especially to Murat Eryılmaz. IREPAS will continue to improve, and maybe we can reach a wider platform, adding other industries as well.
As a Turkish rebar producer, what is your view of the US antidumping duty investigation?
As you know, in today's world, all countries are trying to eliminate protectionist barriers. We are trying to create a freer trade environment, but there is also an undeniable fact: the producers want to take measures to protect themselves in their own region. I think the antidumping duty investigations are the producers' last resort. The US is experienced in this field and every time it seeks to put its experience to use. The dumping investigations might appear like a negative development, but, if you are experienced enough, you can turn a disadvantage into an advantage. Turkish producers have done this in the past. We have faced many antidumping investigations in several international markets and succeeded in all cases. Therefore, I am not pessimistic about the US rebar investigation. Another reason for me to be optimistic is that the US is one of the most positive markets in the world and I am curious to see how the US will prove that there is injury. Even if they do and the investigation result is against Turkey, I do not think that this will have negative effects in the long run.
What do you think about the serious challenges long steel producers have been facing lately?
The long steel producers are not the only ones facing challenges, all producers are facing them. The biggest problem is that current demand levels are not satisfactory for the market and or for producers given current capacity or production. That is to say, the problem is one of overcapacity. In some countries, certain producers can adjust their production according to demand; however, there are many others which are not able to do this for various reasons. This is causing problems in the market. To overcome this situation, first of all demand must improve, but this is not expected to happen in the short term. Maybe in a few years' time, supply and demand will reach equilibrium, but for the time being I cannot say what will happen in terms of production. When you continue producing, you have to pay more for the raw material because of the demand you have created and you put pressure on the prices of the products you produce. In the end, the margin you worked for is gone. That is what concerns producers most.
Finally, apart from the problems you have mentioned, what are your short- and medium-term expectations for the market?
Lately, the outlook has been a bit more positive. Favorable market conditions are witnessed again in the US. Europe is slowly emerging from the euro crisis. I think the elections in Germany will have positive effects as well. The improvements in the US and Europe will also reflect positively on the rest of the world. Another expectation, or rather a hope, is that the markets will gain some relief from political troubles subsiding in the Middle East. However, all this will not happen in just one day, it will take time. I think we are almost certain that the current situation will last until the end of the year. 2014 will also be similar to the current year, but we are expecting some improvement starting from next year.

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