Characterized by an overall calm during the current week, the Turkish domestic flats market has continued its slackening trend in terms of demand. One of the main reasons behind this calm is the current concentration on exports to Europe of the main flats consuming sectors in Turkey, i.e. the pipe, automotive and machine building sectors. Due to the upcoming August holiday in Europe, these abovementioned sectors have all registered decreases in their exports to this region, and at the same time they have experienced a slowdown in their flats consumption volumes. During the current week, exports of the Turkish pipe mills to Europe decreased in volume. Meanwhile, political uncertainty and tension have caused a halt in investments in Turkey and pushed investors into a waiting period.
In the upcoming days, the policy to be followed by Turkish integrated steelmaker Erdemir will be a significant determining factor in the Turkish market. As previously reported, Russian steelmaker Severstal's flats offers for Turkey have remained unchanged from the previous levels. Meanwhile, Ukrainian steelmaker Ilyich has made a reduction of $10-20/mt in its flats offers for Turkey during the current week. The price announcements to be made by Russian producer MMK and Ukraine's Zaporizhstal, and also by Erdemir will be very important. Due to the electricity price hikes in Turkey and the rising raw material costs, it is highly unlikely that Erdemir will make a reduction in its prices. It is also reported that MMK and Severstal have both made price increases in their local markets.
Apart from all these issues, it may be said that one of the important reasons for the slowdown in material purchases is the current cash shortage experienced by companies. With products prices having been raised, although the companies with increased capital requirements are trying to find various ways to cover this rise, they have started to experience problems with cash flow nowadays - just at a time when demand has slightly declined. In particular, the small scale traders that are in need of cash are the ones coming under the greatest pressure. On the other hand, the companies with strong capital and cash supplies are, relatively speaking, doing more business during this period of stagnation.