As of January 1, import duty for hot rolled products in Turkey has increased to thirteen percent from five percent and the import duty for cold rolled products has increased from six percent to thirteen percent. Due to this decision, the latest flats deals in Turkey have been concluded from the countries that Turkey is not operating import duty. There is no import duty for the flat steel products from the EU countries and Egypt. It is started to be observed that there are currently some deals in the Turkish flats market; however it cannot be at as much levels as last year. There have this week been a deal of HRC has been concluded from ArcelorMittal Galati at the price level of $450/mt CFR Turkey. EZDK's offers to Turkey for April production material has registered an increase to the level of $495/mt CFR. Also, Ilyich offers given by traders to Turkey have been at $400-405/mt CFR Turkey. Meanwhile, the latest HRC offers of the Russian producer MMK have been at $425/mt CFR Turkey. This producer's offers for March production material will be announced towards mid-February. Due to the overall demand tightening in flats, some South America origin flats offers to Turkey is also being heard.
On the plates side, no change has this week been observed in offers to Turkey. Ilyich offers for commercial plates have been at $580/mt CFR Turkey, whereas the offers for shipbuilding plates have been at $615-620/mt CFR Turkey. Meanwhile, Donetsk's commercial grade plates offers to Turkey have still been at $460/mt CFR.
Looking at the Turkish domestic flats market, having gained activity for a week or two, it seems that the Turkish market has entered into a relatively stable trend again. Following the increase in import duties, and thanks to the Erdemir's aggressive sales policies, most of the selling products in Turkish domestic market are now Erdemir production. The material in question can be found in the local Turkish market with appropriate price levels i.e. $520-540/mt for 2 mm HRC. In general, there is price gap of $80-100/mt between CRC and HRC. However, it is observed that the gap in question declined to $30-40/mt under today's conditions. The main reason for this range can be explained eith the sluggishness in the main export based sectors such as automotive and white goods. In the local Turkish market, it is observed that 25-40 mm plates can be bought at $770-790/mt, whereas the above 50 mm plates can be bought at $800-830/mt. On the galvanized side in the same market, the demand activity that previously observed due to the import duty increase has this week slowed furthermore. The price levels of 0.5 mm 100 gr/m² zinc coated HDG are at $760-775/mt CFR Turkey.
Meanwhile, the main problem in the Turkish flats market is not the pricing. Most of the trading companies in the market do not want to do business unless the payments are cash. Payment problems in the market are currently causing this kind of decision. In order to gain the market confidence again, the foreign markets will have to gain activity first. Due to the fact that Turley is a strong exporter country and most of the projects has been delayed in the local market due to the upcoming elections. For this reason, the general production in the country's flats consuming sectors has been cut. There will be no raw material consumption without production. Additionally, most of the flats consumers used to make the payment for raw material after they sell their products. For this reason, the flats sector in Turkey has literally stuck. A certain softening rate may be observed regarding the prices if the current sluggish demand will continue. However, costs will likely create pressure at that point. Flats sector cannot be able to decline the prices below a certain degree due to cost levels, so the may push the ore, scrap and slab suppliers in order to decrease the costs. However, again, raw material prices have not been able to push below a certain price degree despite lacking demand.
It is expected that a recovery will likely to be seen in the Turkish flat steel sector in the upcoming month and due to the current uncertainty, no price change may be expected. It can be said that the flat steel prices, which have been on a stable trend since early January, will likely maintain its stability for a little while.