Turkish spot flat steel prices soften

After Turkish steel producer Erdemir reduced its flat steel prices last week, traders' flat steel sales prices in Turkey's Eregli and Gebze regions had remained above Erdemir's prices for November rolling. Thus, flat steel sellers in the Eregli and Gebze regions have adjusted their prices downwards this week. However, stating that market demand lacks strength, market players say that they are facing difficulties in their flat steel sales due to the strength of the US dollar against the Turkish lira. Traders emphasize that they are losing advantage when the exchange rate of the dollar increases against the Turkish lira since they buy materials from producers on US dollar basis and sell on Turkish lira basis, adding that in such situations price softenings and fluctuations would have maximum impact. In the Turkish flat steel spot market, the lower ends of price ranges have dropped down in line with price reductions of smaller-scale suppliers, while the upper ends of price ranges have also decreased, though by a smaller margin as compared to the lower ends, due to weak demand, although large-scale suppliers have tried to stand firm behind their prices.
 
Accordingly, hot rolled coil (HRC) spot prices this week have been at $730-750/mt, and prices of cold rolled coil (CRC) of 1-1.5 mm thickness have been at $860-900/mt, both ex-warehouse. Lower ends of price ranges come from the Eregli region and the upper ends are from the Gebze region. However, lower prices are also available in the market.
 
On the import side, Ukrainian flat steel producer Ilyich is offering HRC to the Turkish market at $680-685/mt CFR. When import duty added, this price range approaches Erdemir's price level. Thus it seems difficult for this offer to find acceptance in the Turkish market. Considering narrowing flat steel demand and economic uncertainties, Ukrainian and Russian suppliers may become much more aggressive in their offers to Turkey in the coming days.
 
As for Turkey's flat steel exports, Turkish producers' HRC offers to Europe stand at $720/mt FOB. However, European buyers' interest in these offers is fairly low. While the risk of an economic crisis grows in Europe, European buyers have turned to their domestic market, where demand remains low. Nevertheless, some aggressive offers from Asia and the CIS also find some interest among European buyers. Given HRC prices in southern Europe, a key export market for Turkey, stand at €525-530/mt ($709-716/mt), it seems unlikely Turkish offers will gain acceptance in the region.