The Turkish flats sector has been going through such tough times that, although flats imports are at quite low levels, İsdemir has already halted its production. Currently, only Erdemir production materials are available in the market and these materials seem to satisfy the weak market demand. Prices are on a decreasing course; however, despite the lack of demand, no rapid and sharp deterioration has been observed in price levels. This may be explained as the result of producers' efforts to keep their prices at certain levels, due to their concerns over cost pressure. Russian and Ukrainian mills who are not currently able to sell their materials to Turkey - one of their best customers - have been trying instead to sell products to alternative markets such as India and China. Meanwhile, it is seen that the mills in question have been raising their offer levels albeit by low margins over the last week. This shows that cost pressure is exerting strong pressure on producers. However, as long as iron ore prices continue to decrease, the downtrend will continue in the flats market where demand has been trending at very low levels.
Iron ore producers, who have been resisting price reductions in the annual iron ore contract talks, have said that they will take measures to avoid lower prices in the near future when sales tonnages decline; nevertheless, it seems that they will conclude long-term contracts at reduced levels. The iron ore spot price should decrease further from its current level of $60/mt, considering current demand levels. Coking coal prices have decreased by 57 percent in the annual contract concluded by Nippon Steel. On the iron ore side, to enable iron and steel producers to determine their costs through a greater ability to predict the future market, there should be similar price discounts for annual contracts to those seen last year.
It is known that Erdemir has sold HRC to the local market at the level of $410-420/mt, while it sold CRC at $500-530/mt. However, in this week's online tender, Erdemir's HRC prices decreased to $340/mt while its CRC prices declined to $400/mt. This gives an idea of the severity of the situation. Unless confidence environment is completely restored in the global markets and a recovery is also seen in the leading flat steel consuming sectors, i.e. automobile, white goods, shipbuilding and pipe, it is hard to see a reverse of the current situation. In short, prices are unlikely to show an uptick while demand remains low. Also, demand will only show a recovery if confidence is restored and consumers start to spend money again. Although, some measures have been taken in order to accelerate this process, further time is still needed for these measures to be reflected in the real sector.