Will prices switch to an uptrend in Turkish flats market?

After witnessing low transaction activity and a downward price trend, the mood in the Turkish flat steel market has now improved following larger volume bookings seen in the last days of June. Buyers confirm that they have started to book also for August, as well as for July rolling. After the volume of Turkish mills' export offers had increased last week, the volume of inquiries in the Turkish domestic flats market has risen this week. Accordingly, Turkish flat steel producers now seem to be content with this demand revival and with the transaction volume. Moreover, it is reported that some steel producers have largely filled their order books for August production and have started to put incoming inquiries on hold.
 
The main reasons for this revival are indicated as the substantial regress in inventory levels and the belief that flat steel prices have already reached the bottom. In the last couple of weeks, product availability had reached critically low levels and supply shortages have emerged even for some of the most common products in the spot market, as buyers had adopted a wait-and-see stance for quite a while, keeping their inventories as lean as possible. Besides, expectations for further price cuts had also resulted in postponement of new bookings.
 
In the meantime, last month hot dip galvanized (HDG) coil producers started to complain about market price levels, saying that further cuts are unlikely given the already tight profit margins. European steel producers' production cuts also supported the impression that prices have hit the bottom. Major steelmakers with worldwide sales networks announced that they cannot afford further price reductions to push their prices down to marketplace levels and so they have reduced their production rates. Furthermore, since some Turkish steel producers will conduct maintenance works during August, concerns regarding the risk of more serious supply shortages have increased.
 
As the market mood has improved in the Turkish domestic flat steel market since early this week, it has now started to be mentioned that a price increase may be seen in August, a month when prices usually moved down in past years. Besides, strong transaction activity before the announcements of new import offer prices support the idea that buyers have at last decided to build up their inventories after restricting their bookings for quite a while. Although no price increase has been seen so far, market players now think that price declines have now come to an end.
 
As of today, hot rolled coil (HRC) offers in the Turkish domestic market are standing at $615-635/mt, while cold rolled coil (CRC) offers are at $730-750/mt and HDG coil offers are at the price range of $740-760/mt, all ex-works.