In the spring season an improvement in demand levels in the Turkish domestic flats market has started to be observed as compared to the winter months. Greater optimism is also seen in the market as compared to the winter. Since stocks have decreased and as there is a widespread view among market players that prices have reached bottom levels, firms in general have again turned their attention to the purchase of flat steel products. Thanks to the tax cuts in Turkey in recent times, there has been improved dynamism in the automotive, white goods and furniture sectors in Turkey. On the back of this dynamism, firms with low stocks have switched to purchasing mode in line with their needs. Thus, stimulus measures such as tax cuts are essential to maintain activity levels in Turkey. Sectors in Turkey have been purchasing in line with their needs: for example, the pipe sector in this country normally operates from stocks; however, considering the export figures, it is clear that players in this sector have been buying just in order to meet their needs. In short, steel consumption in every sector is closely in line with orders. For this reason, it is almost certain that the current dynamism will lose speed as the general holiday season approaches coming up to July.
Due to the import duty on flat steel products, flats in the local Turkish market are generally bought from local producer Erdemir. In recent months, there has been some activity in imports with some deals being concluded. It can be said that products with the Euro 1 certificate have seen greater import activity due to its advantage as regards import duty. Erdemir production standard quality HRC is being sold at $430/mt, while its CRC is being sold at $500-520/mt, ex-warehouse by traders in the local market. Since Russian producers' order books are being increasingly filled up due to their sales activity to the Far East, they have increased their price levels for June production in their offers given to Turkey and their other export destinations. While the Russian producers' offers for HRC were last month at $380-395/mt CFR Turkey, these offers have increased to $400-410/mt CFR this month. Meanwhile, ex-Ukraine HRC offers are currently at $345-370/mt CFR Turkey. On the other hand, ex-Russia CRC offers to Turkey are at $470-480/mt CFT Turkey. Additionally, Erdemir has also increased its export offers. This producer's HRC offers have increased to $390/mt FOB while its CRC offers have increased to $460/mt FOB, up from price levels of $380/mt and $450/mt respectively.
With regard to plate, it cannot be said that demand is lively for this product. Demand for thin sizes seems to be better compared to demand for thicker sizes. Despite the plate deal concluded from Ukraine to Turkey in the last week, plate imports in general are indicating slow activity for the time being. The tightening of demand in the plate consuming sectors may be seen as the main reason behind the abovementioned situation. The latest deals concluded by the Ukrainian producer Donetsk to Turkey were at $380/mt CFR. Thanks to its sales activity to the Far East, Donetsk moved to increase its offers for June production material to $400/mt FOB; however, in the middle of last week the producer revised its offers back down to $380-390/mt FOB. On the other hand, Ilyich's plate offers are currently at $460/mt FOB.
Meanwhile, galvanized coil consumption in the local Turkish market has seen a certain rise in activity on the back of the dynamism in the automotive and white goods sectors in this country. Due to the recovery in demand (for commercial grades), the delivery dates of the HDG producers have been extended. The market in general has started to show activity due to the increased dynamism in the construction sector and the decline in stock levels. However, this activity is at far lower levels compared to the corresponding period in recent years. Producers' HDG price levels in the local market are at $780-800/mt for 0.30 mm 100 gr/m² zinc coated, $650-685/mt for 0.50 mm 100 gr/m² zinc coated, $610-650/mt for 1.00 mm 100 gr/m² zinc coated and $600-630/nt for 2.00 mm 100 gr/m² zinc coated material. All prices are ex-works. Meanwhile, excess supply is observed in the local market for thin specifications. Additionally, a deal for HDG has been concluded from Romania. For the first time in a long time, it is expected that HDG prices may register an uptrend in the local Turkish flats market.
It is worth remembering that the steel sector is likely to be the first sector to emerge from the crisis just as it was the first sector to feel its effects. With demand now observed to be gaining strength slowly, the stability of this trend is totally dependent on the improvements in the economy and industry in general.