The price levels for this month in the Turkish flats market are being issued at the current time. Following the Russian producers' prices, the Ukrainian producer Zaporizhstal's price levels have been announced on Monday, July 21. According to the announcement, this producer's price levels have decreased by $10-20/mt compared to last month's levels. This month's announced prices from the various producers are as follows:
Zaporizhstal's announced prices are for September shipments. Also, it is expected that the company will announce its CRC prices this week.
Meanwhile, the Russian producer Magnitogorsk Iron & Steel Works (MMK) will perform shipments in late August/early September. The other Russian producers' offers are for October shipments.
The price levels of Erdemir, one of the main producers in the Turkish domestic flats market, are as in the list above. It should be remembered that an import tax of five percent still has to be added for CIS origin hot rolled material, while there is a six percent import tax on cold rolled from the same origin.
According to the rumors, approximately 80,000 mt of flat products have been supplied from the Far East to the Turkish market in the past one or one and a half months. We will see the impact of the material in question on the market in the coming days.
One of the main problems in the Turkish flats market is finance. For example, in order to reach last year's tonnage figures, twice the amount of capital will be needed this year. The companies who have not got the necessary financial power are turning their attention to foreign financial sources. However, it is observed that even these foreign sources are not able to supply the required sums due to the increasing steel prices. There is a possibility that the steel markets may enter a stable period due to the European holiday break in August and the religious holidays (Ramadan) in September. However, it is known in the iron and steel world that once a trend starts in the sector, no holiday or Ramadan is able to stand in its way. The data below may be helpful for a better understanding of the upcoming period.
* The prices are on CFR Turkey basis.
Looking at the table above, the lower part shows the monthly prices in 2007 of hot and cold rolled imported material from Russia. The yearly prices are also shown on the table calculated on the basis of the average monthly prices. On the upper part of the table, the 2008 prices of the imported hot and cold rolled material from Russia and their average price levels can be seen. All prices above are on CFR Turkey basis.
The main features of the table are;
1. Average prices of HRC and CRC: According to the table, the average price of imported hot rolled material from Russia is at $630/mt, while cold rolled material is at $695/mt. However, looking at the first seven months of 2008, it is observed that hot rolled material prices have increased to $1,050/mt, while cold rolled material has increased to $1,095/mt. The gap between the figures is raising financial issues. In the first six months of this year companies have used up the financial credits they would normally use up in a whole year. Since the financial sector is unwilling to follow in the path of the increasing prices (as shown above), difficulties are being experienced in purchasing materials.
2. The periods when prices are above average: Looking at the price averages in 2007, the first point of interest is that the increases are seen in the March-May and August-October periods. Following the strong increases in question, the market stayed stable in the October-November period and registered a sharp increase again in December; eventually going on to increase until July, 2008. Looking at the 2008 figures, the market stayed relatively stable in the June-August period following the increases in the March-May period (just like last year). If we take last year's data into consideration, then the market could possibly face another increase in the upcoming months.
3. The HRC-CRC price movements: With the increase starting in late 2007, the difference between the HRC and CRC prices has started to narrow. In the 2008 April-May period, the gap has opened up slightly again and come closer to the 2007 average of $65/mt.