TURKEY FLAT STEEL WRAP: Moderate demand forecast again for June

Demand for flat steel in Turkey will remain moderate through June, but prices are believed to have bottomed during May, market participants told Metal Bulletin.

“Local demand is not good, but exports are good. I don’t think prices will fall - they have bottomed already,” one market participant said on Friday June 1.

“Our prices are low compared with global prices. In the United States, hot-rolled coil [HRC] is $1,000 per tonne,” one trader said on May 25.

“Demand is sluggish, due to the lira losing value [and market] uncertainty. But there is some buying. Demand will weaken until August. But if the lira keeps losing value, things will get worse,” one market participant said on May 25.

The lira was trading at TRY100 to $22.21 on May 31, down from TRY100 to $24.66 on May 1, according to exchange rate website Oanda.com.

Additionally, Turkey is holding general and presidential elections on June 24, and this is creating more uncertainty in the market, sources said on May 25.

The country produced 4.04 million tonnes of slab in the January-April period this year, a 6.74% increase on the 3.78 million tonnes produced in the first four months of 2017, according to the Turkish Steel Producers Association (TÇÜD).

The Turkish ministry of economy has started an investigation into the effects of steel imports on the country’s domestic steelmaking industry, it said on April 27.

The products under investigation include flat, long and stainless steel, along with steel tube and pipe products. The probe should be complete in nine months, but may be extended by another six months if required, the ministry said.

Turkey may take also counter-measures against the Section 232 import tariffs imposed by the United States, economy minister Nihat Zeybekçi said on May 12.

The US imposed a global 25% duty on steel imports and 10% on aluminium imports after concluding its Section 232 trade investigation into imports with a bearing on the country’s national security. But it announced temporary exemptions for countries and regions including the EU, Australia, Brazil, South Korea, Mexico and Canada.

Turkey was not on the exemption list, Zeybekçi said, but the Middle Eastern country has a trade deficit with the US. It exported steel worth $1.2 billion to the US in 2017, but the value of its imports from the same country totaled $1.3 billion, he said.

Turkey is the sixth-biggest steel exporter to the US, he added.

“We told [the US government] very clearly that Turkey should be kept out [of the Section 232 process]. We also made attempts [to gain exclusion] by applying to the World Trade Organization [WTO]. Very recently, we told them that we will take counter-steps,” Zeybekci continued.

A Turkish flat steel trader said that steel prices in the US started to increase too quickly after the announcement of the new import duty.

Metal Bulletin’s weekly price assessment for exports of Turkey-origin HRC was $585-590 per tonne fob on June 1, while the daily index for USA domestic hot-rolled sheet was $880.60 per tonne fob on May 31.

Domestic prices
HRC, CRC
Most Turkish domestic flat steel prices decreased in May on weak demand. Still, most producers managed to fill their order books for July production.

Metal Bulletin’s price assessment for Turkish domestic HRC was $585-590 per tonne ex-works on June 1, compared with $620-625 per tonne ex-works on May 4.

Metal Bulletin’s price assessment for Turkish domestic cold-rolled coil (CRC) was $680-690 per tonne ex-works on June 1, unchanged since April 27.

Coated coil
Turkish coated coil prices decreased in May, with demand in both the domestic and export markets slow because of the price falls in HRC and CRC.

Metal Bulletin’s weekly price assessment for Turkish domestic 0.50mm hot-dipped galvanized coil (HDG) was $745-765 per tonne ex-works on June 1, falling from $775-780 per tonne ex-works May 4.

Similarly, the weekly price assessment for Turkish domestic 0.50mm-gauge pre-painted galvanized iron (PPGI), or color-coated coil, with 9002 color code, was $840-845 per tonne ex-works on June 1, versus $860-870 per tonne on the same comparison.

Metal Bulletin’s weekly price assessment for Turkish HDG exports was $740-745 per tonne fob on June 1, falling from $775-780 per tonne fob on May 4.

Turkey exported small volumes of HDG to Europe and Latin America at $770-775 per tonne fob mid-May.

And the country exported HDG at $740-745 per tonne fob to Europe later in the same month.

Import prices
Meanwhile, demand for flat steel imports has not been strong, because prices have not been competitive and end-user demand was already weak, sources told Metal Bulletin.

Russia sold small quantities of HRC to Turkey at $575-580 per tonne cfr, and Ukraine sold at $570 per tonne cfr,

Metal Bulletin’s weekly price assessment for HRC imports in Turkey was $570-580 per tonne cfr on June 1, falling from $610-630 per tonne cfr on May 4.

And the weekly price assessment for Turkish CRC imports was $630-650 per tonne cfr on June 1, falling from $670-685 per tonne cfr on May 4.

HRC exports
European demand for Turkish HRC was strong in May.

Turkish producers sold 10,000-15,000 tonnes of HRC for export at $585-590 per tonne fob to Europe late in May.

And about 10,000 tonnes of HRC was sold for export at $585-590 per tonne fob to Europe shortly after.

Metal Bulletin’s weekly price assessment for Turkish HRC exports was $585-590 per tonne fob on June 1, falling from $615-620 per tonne fob on May 4.

Investments
Turkish steelmaker Tat Metal will add a pickling line with capacity for 1.5 million tonnes per year to its facilities at Eregli in northern Turkey by the end of 2018.

Tat Metal currently has 500,000 tpy of pickling capacity, but the new mill has more advanced technology, so the existing line will be removed.

The company’s second HDG mill, which has capacity for 450,000 tpy, recently started trial operations, and its utilization rate will increase in June.

With the new line, Tat Metal’s HDG capacity rises to 800,000 tpy.

Tat Metal also ordered a new cold-rolling mill in April 2018, with capacity for 1.2 million tpy.

The steelmaker currently has capacity for 600,000 tpy of CRC, 800,000 tpy of HDG, and 150,000 tpy of color-coated coil (PPGI).
 

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