While Turkish flats market is closing the year in quiet, price levels in the market in question may rebound in the New Year due to a rumor in the market. According the rumour in the market, a custom duty is a subject for the import flats products in Turkey. A lot of service centers think that the decision will be announced in a very short time. Although there is no official announcement, it can be said that there is no smoke without fire. If a custom duty will be implemented on import products, this will likely cause the end users to increase their prices. Thus, this situation will push the flats prices up. Everybody will see the developments on this case on the upcoming days.
Production cuts in the automotive sector have been continuing in Turkey. According to interviews with the market players, companies that are subsidiary industry of automotive have been experiencing hard times as they have fairly high steel stock levels with high stock costs. As widely known, automotive sector makes "just-in-time" production and due to this factor, it manufactures depending on orders with a little to zero stocks. Due to the lack of orders nowadays, material demand from the main sectors from the subsidiary industries has stopped. Those firms in the subsidiary industries that working with higher steel stock levels had to produce with previously bought steel.
As the abovementioned situation is same for the sector such as pipe, white goods, machinery and shipbuilding; it can be said that all problem comes from the decline in the end-user demand level. So, what is the reason behind the decline of the demand level in question? Global financial problems, which have come from the USA, have become a crisis of confidence. Banks are now acting more selectively for loaning to the companies from the sectors and to another bank as well. Also, people are now hesitating to spend money. In brief, it is almost impossible to be released from the financial crisis without climbing over the confidence problem in the global markets.
Consequently, when will the confidence return? Who can answer this question? For the time being: Nobody. In this period of time, banks have been continuing to give credits with high rates. Considering the fact that the situation of plenty of firms' situation will be clearer in around January or February, it can be said that this lack of confidence will not come to an end until February.
Price movements before the abovementioned time period should not be considered as permanent. Possible spring time will likely be temporarily. However, it is also possible to observe some momentum in mid-February. While the pipe and profile prices have this week gone up in the Turkish domestic market due to the abovementioned rumor, flats prices have remained unchanged in general. As SteelOrbis, we wish all the best in 2009 to all market players.