Production costs rise in local Turkish welded pipe market as demand remains weak

Friday, 05 October 2018 17:10:12 (GMT+3)   |   Istanbul
       

During 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 remained stable week on week at $630-660/mt ex-works.

Meanwhile, the Turkish Energy Market Regulatory Authority, which publishes electric power charges every three months, announced at the beginning of October that electric power charges for industrial usage have been raised by 18.4 percent. Following the 14 percent hikes announced in both August and September, industrials’ costs for electricity in Turkey have now increased by 53.87 percent since August. Also, BOTAS has increased natural gas prices by 18.5 percent for the industrial sector, effective as of October. With the increase announced in natural gas prices for the industrial sector for the third consecutive month, industrial plants’ natural gas consumption costs have risen by 54 percent.

According to the statistics released by the Turkish Statistical Institute (TUIK), in September this year the consumer price index (CPI) and the domestic producer price index (PPI) for Turkish industry at 24.52 percent and 46.15 percent, respectively, have exceeded expectations. Accordingly, the Turkish lira has once again started to lose strength against the US dollar. While the gap between the CPI and the PPI has increased significantly, inflation in Turkey is expected to continue increasing in October since the significant rise in production costs will eventually be passed on to consumers. Under these circumstances, demand in the local Turkish welded pipe market is at low levels, with buyers postponing their purchases due to their concerns about the economic outlook. Meanwhile, SteelOrbis has also been informed that a Turkish welded pipe producer is offering a 45 percent discount for sales with cash payment in advance.


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