TURKEY FLAT STEEL OUTLOOK: Prices unlikely to increase in November as buyers avoid restocking

Flat steel prices are unlikely to increase in Turkey in November because buyers will seek to avoid having high stocks toward the end of the year.

“Mills have not closed their December orders yet, but demand is very weak,” an executive with a steel service center said on Friday November 3.

“One reason is that it is the year-end delivery, [and] buyers [want to] avoid high inventories. Another reason is that prices have been falling [and] nobody buys when prices are on a downward trend. And a third reason is that the economy is not good – the Turkish lira is losing value and end-user demand is poor,” he explained.

“I expect better demand in January, but not before then,” he added.

“Coil prices are falling [and] demand is weak. It will be like this until the year-end but it is hard to say if the price fall will continue,” another trader said.

However, the country’s flat steel production is expected to keep increasing as buyers prefer local products to imports.

Turkey’s flat steel end-product output totaled 8.40 million tonnes in the first eight months of 2017, a 19.90% increase, according to the Turkish Steel Producers’ Assn (TÇÜD).

Slab production in Turkey came to 8.81 million tonnes over January-September 2017, up by 22.05% from 7.21 million tonnes in the first nine months of 2016, TÇÜD said.

“There is no demand for imports when there is 9% import duty [for hot-rolled coil (HRC)] and prices are close to our local prices. Why would I import?” one trader asked.

“We are not importing because of the import duty. But in general, demand for imports is weak [anyway] because of the high prices. Local prices are in line with imports,” another trader said.

Metal Bulletin’s weekly price assessment for HRC imports in Turkey was $550-555 per tonne cfr on November 3.

The weekly price assessment for Turkish domestic HRC was $560-570 per tonne ex-works on November 3.

October prices
Domestic prices
Hot rolled coil, cold-rolled coil
Flat steel prices did not change much in October, when demand was moderate in the market.

“We prefer not to buy,” a steel service center executive said. “Everyone is trying to de-stock [as the] year end is coming. But I do not think prices will fall before mid-November because import offers are high. End-user demand is moderate – I cannot say it is strong.”

Metal Bulletin’s weekly price assessment for Turkish domestic HRC was $580-590 per tonne ex-works on October 27, narrowing downward from $580-600 per tonne ex-works on October 6.

The weekly price assessment for Turkish domestic cold-rolled coil (CRC) was $670-680 per tonne ex-works on October 27, up from $650-655 per tonne ex-works on October 6.

Coated coil
Turkish coated coil prices decreased through October, as demand was not very strong and producers gave discounts.

The weekly price assessment for Turkish domestic 0.50mm hot-dipped galvanized coil (HDG) was $715-770 per tonne ex-works on October 27, falling from $750-800 per tonne ex-works on October 6.

The weekly price assessment for Turkish domestic pre-painted galvanized iron (PPGI), or color-coated coil, of 0.50mm gauge, with 9002 color code, was $879-880 on October 27, compared with $880-920 per tonne ex-works on October 6.

In addition to weak local demand, export demand for Turkish coated coil falls in the CIS region when winter arrives toward the end of the year, so prices are unlikely to increase, according to market sources.

Import prices
Import prices from the CIS region, meanwhile, were close to Turkey’s domestic flat steel prices in October. Buyers preferred to wait and see if prices would fall, meanwhile mostly preferring to buy local products.

The weekly price assessment for Turkish HRC imports was $550-570 per tonne cfr on October 27, down from $580-585 per tonne cfr on October 6.

And the weekly price assessment for Turkish CRC imports was $610-620 per tonne cfr on October 27, down from $629-630 per tonne cfr in the same comparison.

HRC exports
Demand for Turkish HRC was moderate in Europe in October, and Turkish producers targeted local sales due to the competitive prices in the domestic market.

“Turkey’s flat steel production increased in 2017, so the decline in exports means that producers are targeting the local market. However, it is worth noting that the total export figures in 2017 are on the rise,” one market participant said.

“I expect the increasing trend to continue in 2018. The decreasing supply from China will also help Turkish flat steel exports,” he added.

The weekly price assessment for Turkish HRC exports was $550-570 per tonne fob on October 27, down from $585-590 per tonne fob on October 6.