According to a company report published by Vakıf Yatırım Analiz, Turkish integrated steelmaker Erdemir’s rolling operations are likely to see high level of profitability in the first quarter of 2018, similar to fourth quarter of 2017, given the strong results the company announced for 2017.
The report suggested that steel consuming sectors in China are expected to see slower growth in 2018 and that will result in the weakening of the Chinese steel industry. It is also stated that in 2018 global steel consumption excluding China is likely to pick up by 1.5-2.5 percent and, although China might turn to the export markets when Chinese domestic steel consumption diminishes, the strong trend expected in Chinese steel demand is likely to prevent dramatic falls in prices.
Vakıf Yatırım Analiz expects Erdemir to announce a capacity increase decision in the near future, adding that it expects the new blast furnace would have an annual capacity of at least 2 million mt, with a projected investment of $2.5 billion at most.
“Considering the domestic consumption and export volumes, Erdemir’s market share declined from 40 percent in 2014 to 34 percent as of the end of 2017. In 2018, Turkey’s long steel consumption is expected to increase by 3.8 percent and its flat steel consumption by 4.4 percent. The fact that Erdemir cannot afford to lose market share in the long term as the domestic steel industry grows supports our expectation regarding a capacity increase investment in the near future,” the report said.