The Turkish
stainless steel market is dependent on imports and is traditionally affected by overseas developments after a minimum delay of one month. Indeed, price decreases in the foreign markets in November and December 2008 have just lately been reflected in the Turkish market, where decreases in the range of €0.5-0.8/kg in sales prices of 304/2B grade
stainless coils have been observed. The following general comments may be made about the current situation in Turkish industry overall - There is an absence of a healthy cash flow for the time being; demand for material has declined considerably due to the significant decrease in exports; everyone wants to do business with cash; and, due to the decline in demand, companies have less chance of doing business under current circumstances. A lot of companies are struggling to collect payments for previously-sold materials, and such companies are also hesitating to sell material if payment is not by cash: it seems that self-protection necessitates such a course of action.
So how do we see the current situation develop as regards businesses in
Turkey?. The answer, in fact, is simple. The firms that will eventually prosper are those with strong cash flows, those with their own equity capital, and also firms that maintain a successful damage limitation policy during these difficult times. On the other hand, firms that just take money from one source and simply pass it on to another source and also firms with low equity capital run the risk of going to the wall. In short, the overall contraction in
production will also be observed in terms of the number of sellers operating in the market, and a number of firms with unhealthy financial balances are likely to exit the sector. This precise scenario appears inevitable for the
stainless sector, which has many more SMEs (small and medium sized enterprises) compared to the rest of the steel sector. However, a few strong companies (with high equity capital) will probably emerge much stronger from the crisis and consequently increase their sales volume in the future. Another regretttable thing about the Turkish
stainless steel market is that a lot of companies do not possess sufficient information about the material they sell. Such companies, which are currently doing business thanks to the gap in the sector, will likely disappear in time, to be replaced by stronger and more professional companies.
The tightening of demand in some sectors which use
stainless extensively and which have taken a hit as regards export figures, such as
automotive,
white goods, machinery and
shipbuilding, will likely continue in 2009. For this reason, it is certain that the amount of material sold in the current year will be significantly less compared to last year's figures. However, current price levels seem unlikely to drop down further. The main reasons for this expectation are the nickel prices (which have stabilized and have not fallen below $9,000-10,000/mt) and also the reduced supplies from
stainless producers who have cut their output by 30-50 percent worldwide. It may be said that the current supply-demand balance indicates that current
stainless prices are unlikely to go down further. However, a big revival in demand also seems impossible in the near future.