The local Turkish flat steel market started this week with Erdemir's announcement of a $20/mt price increase on July 6. Thus, the producer's HRC price level has this week been at $500/mt, its CRC price at $550/mt, HDG at $620/mt and tin plate at $650/mt - all prices are ex-works and excluding VAT. Also this week, the producer announced its readjustment of size extras for galvanized and hot & cold rolled products and of grade extras for certain steel grades. The extras increased by $10/mt. In addition, Erdemir also announced that its discount rate of two percent for cash payment in all product groups has been canceled, effective from July 8, 2009.
Expectations for new ex-CIS HRC offer prices have been at $540/mt CFR Turkey for HRC, causing an uptrend in local Turkish flat steel prices in recent weeks. This week the ex-CIS prices were finally announced. Accordingly, MMK's HRC price level is at $535/mt CFR FO Turkey for September shipments. While NLMK's HRC price is at $540/mt and its CRC price at $615/mt, Severstal's HRC price is at $535/mt with its CRC price level at $595/mt - all prices are CFR FO Turkey.
Ukrainian producers have not yet started to give flats offers to Turkey. Although Ilyich's new offer levels are still not certain, new offers from the producer are likely to be heard in the next week. In the same way, it is expected that Zaporizhstal's offers for September shipments will be heard soon.
Looking at plate, the situation in Turkey seems different compared to that in the local Turkish HRC market. Plate demand, for shipbuilding plate in particular, is currently weak in Turkey, mainly due to the significant decrease in shipbuilding orders in the country. While Ilyich and Azovstal are not giving prices for new production shipbuilding plate, Donetsk is currently mentioning the price level of $460/mt FOB Black Sea.
On the commercial grade plate side, Ilyich and Alchevsk have not yet started to give offers, while it is heard that Donetsk is planning to give offers at $450/mt FOB. The Ukrainian producers' commercial grade offers are also expected to be revealed next week. Bulgarian Stomana's plate offers have this week been at around €390/mt CFR Turkey. However, since the producer has increased its price levels for the local market, its offers to Turkey may also indicate a rise. Hungarian producer Dunaferr has filled its order books for August production, principally on the back of sales to the European domestic markets. It is said that this producer will also start giving offers for September production to Turkey and that its offers will be based on Erdemir's plate price levels.
Price levels in the local Turkish market have increased due to a number of factors: imports have been at a low volume for a long time with mostly Erdemir material being bought in the market, stock levels have decreased in the country, and an uptrend in end-user demand has been observed. Furthermore, the CIS flat producers' order books are increasingly full, while the European producers have been raising their prices. All these factors have resulted in a rapid rise in Turkey's domestic flat steel market. Demand in the local market has been relatively slow. Meanwhile, the tightness of material availability in the market may gain some relief when previously concluded deals start to be received, when Erdemir starts to deliver its orders and when Isdemir begins to deliver its orders as of early August.