Besides
Erdemir, Isdemir, Borcelik, Intermet, Kibar Dis Tic. and Kaptan Demir Celik, SteelOrbis from
Turkey attended the 7th
Middle East Iron Steel Conference that was held on December 15-17, 2003.
At the conference, present and future of the
Middle East market and some other markets, which have strong trade relations with this market, have been closely evaluated in details by several conferenciers. Furthermore, Borcelik made a presentation under the heading “A close look at Turkish Iron Steel Market” at the conference. During the presentation, Exports Manager Mr. Kerem CAKIR, informed participants about the new galvanizing investment of Borcelik as well as
Turkey's long and flat products
production, export and import figures.
Some highlighted issues of the conference are as follows:
-
Consumption of flat products in
Middle East market is gradually increasing. The growth in
consumption is reported to be at 15-20% levels, however local producers are supplying only lower than half of the overall
consumption.
- On long products side, increase in
consumption is at a lower pace with only 3% and
Turkey is reported to be the biggest exporter country.
- In imports between the countries in the region, light long products hold the first place with around 6 million tons among imported products. When
Turkey and
Egypt are included, this figure reaches 16 million tons.
- Imports from
Russia,
Ukraine and
Kazakhstan, which are among the other countries supplying material to the
Middle East, account 8.5 million tons. Imports from these countries mainly consist of semi finished products, hot rolled coils (
HRC) and long products, respectively.
- Again
Japan and South
Korea, which supply material to this region, are active on quality products. Sales of these two countries to the region amount 2.3 million tons.
- It is also stressed that the necessity of
Turkey to export long products and usage of import
scrap time to time left Turkish producers in a difficult position recently.
- The biggest competition advantages of Gulf countries are their usage of cheap energy due to natural gas stocks and the stable price of direct reduced iron (DRI) that is used for raw material
production, despite its higher cost. That the producers using DRI will be able to exceedingly decrease these costs with technological renovations that are to be effected on
production lines was mentioned in some last day presentations.
- When costs of raw material and energy are taken into consideration, it is observed that the highest cost is recorded in West
Europe region. It is known that this cost is $50/mt per ton lower in
Middle East countries. In
Russia, which holds the least cost, it is stated that the costs are about $40/mt lower than the costs in
Middle East.
- It is stated that Gulf countries will be successful in exports of energy dense products. HBI and semi products are indicated among these products. However,
trading of these products is reported as being less and the prices are stated to be open to fluctuations.
- Another point stressed was possibility of consolidations to be made among Gulf countries in the future. Purchasing power in raw materials, more specialization on different mills, development of local
distribution networks and service centers and transition to
production of high quality products are shown among the benefits that can be achieved through such consolidations.
- The consolidation works in West
Europe were constituted at two stages:
1- The privatization of firms
2- Regional consolidations
- In Central
Europe, the firms are included into global groups (such as LNM Group and
US Steel). The first consolidation is expected to be formed in
Middle East due to the fact that the privatization is very important in markets particularly in
Iran.
- The growth of
Middle East market is expected to continue by 2008 as taking into consideration the long term expectations. Saudi Arabia, Gulf Countries,
Iran and
Iraq are specified as the main
consumption points.
- Again for the next five years, in flat products Hadeed and in long products
Qatar Steel are expected to be the most successful companies in the region.
- In the region, the
billet prices have currently passed over the
rebar prices and this creates a difficult situation for local rolling mills.
- The demand is still considered to remain strong in the first half of 2004, according to market expectations. At the beginning of second quarter, a market adjustment can be experienced with a slight decrease in long products; however the prices are expected to be stabilized with a rally.
- No price decrease, due to strong US market and Iraqi market which will enter the market in the coming months, and also the huge demand of
China, is expected in the coming future. However, there is a consensus of
opinion that a rapid fall will be experienced when the prices start to decrease.