Over the past week, Turkish producers’ offer range for ERW pipes and hollow sections with 2-4 mm wall thickness made from hot rolled coil (HRC) of S235 grade as per EN 10219 to their domestic market has decreased by $30/mt on the lower end and declined by $20/mt on the upper end to $600-630/mt ex-works. The mood in the domestic market has remained cautious and no significant recovery has been observed in terms of bookings, according to market sources.
As the Turkish Central Bank raised interest rates by 645 points to 24 percent following the meeting of its Monetary Policy Committee yesterday, September 13, the fevered sentiment in the market has calmed down a bit and the Turkish lira has recovered to 6.01 against the US dollar. Due to the strengthening of the Turkish lira, both buyers and producers in the local Turkish welded pipe market are adopting a wait-and-see stance in order to monitor the Turkish dollar-US dollar exchange rate and watch if the lira will continue to recover. As a result, market players are staying on the sidelines and are just monitoring the changes in the domestic economic situation.
Meanwhile, as published in Turkey’s Official Gazette, decree No. 32 regarding the protection of the value of the Turkish lira has been amended by a new presidential decree which states that certain leasing and financial agreements concluded between Turkish residents after the effective date of this presidential decree shall be implemented on Turkish lira basis instead of depending on foreign currencies. This situation has increased the uncertainty in the market since it is not clear how debts in foreign currency will be paid retroactively and how the current contracts will be updated. Meanwhile, Turkish steel producers, who trade on dollar basis, have started to mention use of the Turkish lira soon, though they are awaiting details about the implementation of the new decree.