What direction is the Turkish stainless steel market going in?

As was the case in our previous analyses, the stainless steel markets continue to maintain their strong state. It is not known that how long this will continue. In interviews carried out with the major stainless steel producers in Turkey, SteelOrbis was informed that any possible decline in stainless steel prices would be a sharp one and that the producers would advise market players not to keep high stocks. Moreover, it is also widely known that the order books of Outokumpu, Acerinox, ThyssenKrupp and Arcelor - the major stainless steel producers in Europe - are full till April and that it is almost impossible to conclude any purchases before this date. The offer levels given to the Turkish market are very high. Similarly, the stainless steel market in China is strong with prices also high. In addition, new investments are being seen in China. Although all these factors give the impression that prices will not slacken, investments in raw materials, especially in nickel, and a possible slowdown in rising nickel prices may cause a decline in stainless steel prices. Due to all these factors, the market players in the stainless steel market are acting cautiously. If we look at the developments of the last two weeks, we see that the Turkish stainless steel market has shifted its focus to the Indian and Chinese markets due to the strength of the Euro against the US Dollar, the stainless steel tightness in Europe and the current high prices. Although some materials in the stainless steel industry are in short supply, it would not be wrong to say that the stainless steel market is strong in general. The industry, which has strengthened with the sales concluded before the New Year, will certainly follow a rising trend. However, due to the higher prices, end-users have started to direct their attention to alternative products. Some firms which consider that nickel prices will maintain their strong state in the coming year, have directed their focus to 200 series and 400 series materials. Seeing the tightness regarding these products, some firms have started to conduct certain studies with a view to entering the Turkish market. Jindal Steel is among these firms. The producer held a conference on December 6, 2006, in Istanbul in an effort to introduce their company, production and materials to the industry. Although people are informed that these products should not be used in some sectors, there are some question marks in the market about the issue. Especially in the food industry, it is well known that the relevant authorities should take certain measures and that industry awareness should be increased regarding the use of the appropriate stainless steel materials in areas open to high levels of corrosion, especially close to sea water or in contact with sea water and acidic materials at the same time. In the Chinese local market, the base price of 304 series 2B stainless steel coils of 2 mm thickness is at RMB 35,000-35,500/ton ($4,468-4,532/ton), while the base price of 430 series 2B stainless steel is at RMB 13,000-13,900/ton ($1,659-1,774/ton). Due to the higher nickel prices, stainless steel prices in China are not expected to change until the New Year. Although there is a general expectation that prices will decline in the coming year, the question to be asked is how much this decline will be. The new investments in China will increase the need for raw materials. Considering the fact that stainless steel demand all over the world will increase every year, it is predicted that even if there is a decline in nickel prices, this decline will not be a serious one and prices will not regress to their previous levels.