Erdemir is expected to increase sales prices for all products

Erdemir is expected to increase sales prices for all products

As it is well known, Erdemir notified its customers to report their orders for domestic market and exports until February 19, 2004. Erdemir's sales prices for domestic market were readjusted and although they were revised upwards, prices were still rather low compared to the sales prices of manufacturers in countries in the region producing similar materials. For instance, Romanian origin cold rolled steel is sold at $600/t CFR FO in Turkey, whereas list price of Erdemir ex-works is at $550/t base level. Likewise, Ukrainian origin hot rolled steel sheet in coil offers reached up to $480/t Turkish port level, while Erdemir's price list ex-works is at $450/t base level. It was pretty obvious that there will be a high local demand for Erdemir's products as its list prices were low. However, demand as of yesterday was higher than expected. SteelOrbis is reported that the monthly demand only from the domestic market is around 1 million tons and to meet this amount of demand seems not possible for Erdemir. It is estimated that the producer may cover maximum half of the demand in two months under best circumstances. On the other hand, it is declared that prices reported to Erdemir for export orders are well over its local market list prices. Although activity in Chinese market is rather slow, strong demand for the US market caused increase in prices too. It is speculated that orders for exports are over $60-70/t compared to list prices for the domestic market. Of course, it should be considered that not all export orders are at these levels. But an average of $50/t is estimated. Subsequently, Erdemir which will probably take the new market level and high demand occurred is highly expected to take a new price increase decision at the board meeting which is discussed to be held tomorrow, and effect a 40-50$/t increase to all off its products. Some local market players that forecasted a high domestic demand and that consequently Erdemir will effect a price increase have halted their sales whereas some have already hiked sales prices this week around $30/t before Erdemir. As already acknowledged, in case of a price increase in the domestic market Erdemir reflects only 50% of such increase to the existing orders, and 100% to the post-increase orders.