Due to the impact of Chinese encroachment, Turkish long steel producers have completely lost their market shares in
Hong Kong and
Singapore, which had been their traditional markets for a period of about ten years. The upshot is that the supply of Turkish products to these markets has almost dropped to null in the last three years.
This year, the Chinese threat to Turkish interests again came onto the agenda once more with the arrival of a quantity of Chinese imports in the United Arab Emirates. Some forecasters began to claim that
China would also take over this market in time and again reduce the Turkish share of the market to a negligible percentage. Such predictions are also raising the concerns of purchasers in the market. Even though the purchasers in the market have been well acquainted with the Turkish sellers over many years, and although they do not look favorably at the prospective shift in balance in favor of
China, yet they cannot shut their eyes against the seeming inevitability of the
China advance.
If the question, “who will win this war?” were to be asked, I would have some serious question marks regarding whether there would actually be a war or not. My reason is that the demand both in the region and in
China is currently at a very good level and so there is currently not any reason for a fight. Besides, problems such as quality issues in addition to the length of shipping times should also be taken into account.
If a fight pushed by
China were to begin despite all the factors cited above, then I think the Turks would win in the end. This is because serious investment decisions regarding debar
production in the forthcoming 3 years have been taken in
Turkey, and it is thought that a certain part of the quantity to be introduced will flow to the
UAE market. Moreover, all Turkish
investments of the Turks will be in electric arc furnaces (EAF); therefore, they will strengthen their control on
scrap with every increase in the
production quantity.
Although
China has tried to make combined
iron ore purchases by means of
Baosteel in order to impact on price determination, they failed this year and all Chinese producers experienced a letdown. On the other hand, although Turks are purchasing
scrap separately,
scrap sellers are quite aware that they would not maintain their businesses but for the Turks. Therefore, they are acting from mutual understanding and from a purchaser-seller cooperation built up over many years. Moreover, if a real fight versus
China were to begin, then it should also be considered that Turkish mills neither have the desire, nor the option of losing the
UAE market for the moment.
Tayfun Senturk
Commercial Manager
Diler Dis Ticaret A.S.