Turkish stainless steel sector maintains its quiet trend

Wednesday, 20 August 2008 16:44:24 (GMT+3)   |  
       

The slowdown in Turkey's investments during the summer period continues to keep purchases at very low levels. In addition, the overall soft demand worldwide is causing a further slowdown in all business areas. Nickel prices have recently begun to hover in a price range of $17,500-19,000/mt. Looking at the world markets, the current holiday season in Europe - one of the largest stainless steel consuming markets in the world - and the signs of a general slowdown in this region's economy have both created a demand shortage in the stainless steel sector. When the high levels of supplies in China are added to this situation, inventories of nickel and stainless steel products have surged and worldwide stainless steel prices have dropped down.

As regards the short-term outlook, while a sort of recovery is expected in stainless steel prices with the return of the Europeans from holiday in September, it is very hard to make projections for the markets. However, the prevalent idea among players is that prices have hit bottom in this sector. Although Turkey's stainless steel sector has been developing at a certain rate in terms of consumption, it still does not appear to be very strong. In particular, as long as no improvement is registered in the economy, it seems very difficult for this country to increase its stainless consumption. The future course of the stainless sector will be determined by the answers to the following questions: "How long will the global liquidity shortage continue?" and "When will investments in the developed countries regain their previous acceleration trends?"

Looking at the prices in the Turkish domestic market, prices for imported 304/2B grade 2 mm thickness stainless steel coils have gone down to the level of €2.8/kg, 316/2B grade 22 mm thickness SS coils have declined to €4.2-4.3 /kg, 301/2B grade 2 mm stainless coils have decreased to €7.1-7.3 /kg. On the other hand, 304/2B grade stainless pipes are being sold in the same market at the level of €3.2-3.4/kg. Nevertheless, it is also known that there are some companies in the market currently concluding sales at far lower levels than the abovementioned prices. In particular, consumption as regards 430 grade material continues to be high. In the Turkish domestic market, there are 403/2B grade stainless steel coils being sold at the level of €1.4-1.6 /kg. As regards stainless steel bars, Indian origin materials are still being preferred. 304 grade bars are being sold at the level of $4.5-4.6 /kg, and 316 grade bars at $7.2/kg. It should be remembered that all the said prices exclude VAT (18 percent).

Moving to the offshore stainless offers for Turkey, it is seen that Far Eastern offers are most commonly given due to Europe's current holiday season. In these Far Eastern offers, ex-mainland China 304/2B grade coil is being offered to Turkey at $3,500-3,700/mt C&F, whereas the same product ex-Taiwan is being offered to the same destination at $3,700-3,800/mt C&F. Despite these low-priced offers, buyers are acting hesitantly as regards conclusion of bookings. In general, the Turkish stainless market is characterized by a feeling of uncertainty at the present time.

Looking at the overall picture, it is likely that the demand levels in September will be a determining factor for the trend in the remainder of the year. All market players are expecting a recovery in the month of September; however it should be taken into consideration that Ramadan (which coincides with September this year) has in the past generally been a month of stagnancy for all markets.


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