The significant discount announced by domestic steel producer Erdemir was the most remarkable event observed in the Turkish flat rolled market this week. Until Erdemir's move, the Turkish market had been on a stable trend. The new price level of Erdemir for November orders indicates a $40/mt discount for hot rolled steel products and $60/mt for cold rolled steel products. The attention of the market is now focused on the impact of this move. As a result of the discount, the price level of hot rolled coils from Erdemir has come down to $720-735/mt, and the cold rolled coil price has declined to $855-870/mt, effective, ex-works.
The spot market continues to move on a stable trend. No reductions have been observed in the price levels of local traders in the Eregli and Gebze regions so far; however, expectations for such reductions still exist. Hot rolled coil offers are pronounced at around $750/mt levels generally, while the level for cold rolled coils is at around $890/mt ex-warehouse. However, a softening trend is foreseen probably for the forthcoming days, in line with Erdemir's price cut. Similarly, a price correction from Colakoglu and MMK is expected to follow suit.
The low demand levels overwhelming the global steel markets for months are seen as the main reason behind this downtrend. The fluctuating economic situation and particularly the euro weakening against the US dollar are seen as major factors. Export offers given by Turkish producers have for some time been found not to be workable by European buyers. In such a framework, producers that focused on the domestic market have for some time been failing to find the desired interest from local buyers. The Turkish lira losing ground against the US dollar also added to the uncertainty in the domestic market. Buyers have been looking to postpone their purchases as much as possible, in an effort to minimize the exchange rate alterations. Given all these factors, the steel trading volume has become narrower. Prices in most areas, such as China, Europe and the CIS, have switched to a downtrend. Hot rolled coil offers from Ukraine to Turkey at $680-685/mt CFR levels are also considered to be a factor in the Turkish market's downtrend. According to market sources, Erdemir is currently facing difficulties in collecting orders, and this is considered to be another major reason in its decision to go for a price reduction this week.