At the 6th YISAD Flat Steel Conference & SteelOrbis Market Talks held in Istanbul on April 4, Murat Eryılmaz, general manager of SteelOrbis was the moderator of the second session. Panelists Mehmet Zeren, general secretary of the Turkish Steel Pipe Manufacturers Association (CEBID), Ahmet Özkan, company owner at Dempaş Demir, Asuman Gursoy, general coordinator of Turkish steelmaker and service center Tat Metal and Tayfun İşeri, director of business development and foreign subsidiaries at Colakoglu Metalurji discussed the latest developments in the flat steel supply chain and the global steel industry.
Asuman Gürsoy: Raw material supply will cause problems in coming period
Asuman Gürsoy first talked about Tat Metal’s upcoming investments. Underlining that the company saw significant growth in the last 15 years, she said that their galvanizing capacity will increase to 800,000 mt per year in April and their pickling capacity will move up to 2 million mt in the last quarter of the current year. In the last quarter of 2019, Ms. Gürsoy said that the company’s cold rolling capacity will be 2.2 million mt per year. “In the past the exchange rate was not very volatile, prices were determined by the producers, availability was more important than quality and financial institutions were eager to support investments. Lately, the volatility in product prices and exchange rates, higher freight rates and the negative outlook in global markets has affected us. Raw material supply became difficult as well. On the other hand, the closing of the US market and the duty investigation in the EU raised concerns that our sales may be limited to the domestic market. In short, the return on our investments has failed to meet our expectations,” the Tat Metal official said.
Ms. Gürsoy also said that intensifying trade wars may result in difficulties for Turkey, the world's largest scrap-consuming country, and raw material supply will cause problems if it is not received on time and of the desired quality and it will be hard to know at what prices raw material which reaches Turkey in three to four months will be sold.
Mehmet Zeren: EC may introduce quotas for Turkey instead of duties
CEBID general secretary Mehmet Zeren commented on 2017 and shared his expectations for 2018. In 2017, steel pipe production in Turkey declined to 5 million mt, while Turkish steel pipe exports increased by 11 percent to 1.95 million mt in volume and to $1.4 billion in value. Mr. Zeren said that in 2017 Turkey’s steel pipe exports to Europe saw a significant increase and Turkey’s share in the EU’s steel pipe imports increased to 50 percent from 40 percent. Regarding protectionist measures in the US and the EU, he said that Turkey’s steel export to the US have been declining due to antidumping and countervailing duties on four steel pipe products imported from Turkey, while, in the EU, steel pipe imports from Turkey will not be a big problem as the foreign trade balance is in favor of the EU both in terms of volumes and value. Mr. Zeren stated that he believes that the measures in the EU will be more flexible for Turkey even though he does not expect an exemption. He said that the rumors indicate EU may introduce a quota for Turkish steel pipe imports, adding that in the case of the US an exemption does not seem possible without giving some concessions first.
Ahmet Özkan: Turkey may take steps to reduce freight rates
Ahmet Özkan, owner of Dempaş Demir, said that after 2000 the increase in Turkey’s flat steel consumption and changes in users’ needs pushed traders to become specialized in different areas. He indicated that each segment may set a clear definition of who to target, adding that the main points to pay attention to when choosing suppliers are price, product quality, delivery time and logistics. “The most important thing for everyone is to lower costs and one way to do this is to reduce freight rates. In Turkey, where transportation is mostly via roads, the cost of overseas shipment is almost the same as domestic shipments. Germany carries 50 percent of steel products via railways, and more than 30 percent via sea transport. It is very important that Turkey should form an institution to regulate freight costs as EUROFER does,” Mr. Özkan said. He went on to say that steel producers are treating their domestic and foreign customers differently; they adhere to delivery times with foreign customers, while domestic buyers are of secondary importance.
Tayfun İşeri: Stable production is important in supply chain
Tayfun İşeri, director of business development and foreign subsidiaries at Colakoglu Metalurji, said that if production is stable it is possible to adhere to delivery times. He recalled that in February 2017 Turkish steel mills turned to the export markets when rebar demand from the domestic construction industry was very low and, when constructors returned to the market with strong demand in April, it was not possible to supply products immediately. He stated that problems regarding flat steel products which are supplied to steel service centers are resolved within two days at the latest.