2017 REVIEW: Turkish mills seek new export destinations

The Turkish rebar market was significantly affected in 2017 by the political problems within the country and by the weakening of its currency, the lira, while slow demand in the country’s traditional export markets led steel mills to direct their exports to new destinations.

The worldwide shortage of graphite electrodes was another problem for producers.
Turkish steel producers have been seeking alternative export routes to compensate for the loss of their traditional markets, and managed to increase their exports in the first ten months with cargoes going to new destinations.
As usual, rebar was the country’s primary export product in the first ten months of 2017, which were the most recent figures available at the time of writing.
Turkey exported 4.60 million tonnes of rebar, 2 million tonnes of hot-rolled coil (HRC), 1.60 million tonnes of steel pipes, 1.20 million tonnes of steel sections and 1.10 million tonnes of wire rod in the first ten months of the year.
Steel exports
The value of Turkey’s steel exports in January-October 2017 rose by nearly 25%, despite the volumes shipped increasing by just under 8%, according to the Turkish Steel Exporters Assn (ÇIB).
Turkey exported 14.60 million tonnes of steel products in the first ten months of the year, up by 7.60% year on year. But the value of those exports increased by 24.70% in the same comparison to $9.20 billion, thanks to rising prices for finished steel.
The monthly average of Metal Bulletin’s weekly price assessment for rebar exports out of Turkey was $523.75 per tonne fob in October 2017, compared with $376.88 per tonne in October 2016.
The EU became Turkey’s principal steel market over the period, taking in 4.50 million tonnes – up by 54% compared with January-October 2016.
The Middle East was the second-largest market for Turkish steel, on 3.30 million tonnes, followed by North America with 2 million tonnes and North Africa with 1.20 million tonnes.
Turkish steel exports into Central and South America rose by 34% year on year to more than 1 million tonnes, while exports into Southeast Asia rose by 559% year on year to 1 million tonnes, the ÇIB said.
“The biggest buyers from Turkey were Singapore, Italy, Spain, Canada and Hong Kong in January-October. [And] we sold HRC to Italy and Spain, and rebar to Singapore, Hong Kong and Canada,” association chairman Namik Ekinci said.
The biggest declines in Turkish steel export volumes were to the United Arab Emirates, Egypt, the United States, Iraq and Oman, he added.
“[The] Middle Eastern countries, our traditional export markets, are building their own industries and making it difficult to export to their markets,” Ekinci said. “In addition, political problems in Iraq are also [depressing] our exports.”
Politics
The Turkish rebar market was significantly affected by internal and international political problems in 2017.
The continuing war in Syria was hurting demand from that region while exports to northern Iraq were badly affected by the problems which emerged there following the independence referendum held by the Kurdistan regional government in September. The result showed that 93% of voters in favor of independence but the Iraqi federal government did not accept the legitimacy of the vote.
The weakening of the Turkish lira was another problem for buyers in the country’s domestic market because mills buy raw materials in deals denominated in US dollars and sell finished goods to local markets in lira.
Separately, a crisis between the US and Turkey arose after the arrest of a Turkish citizen working at the US Consulate in Istanbul. The US has suspended its visa services in Turkey, while Turkey took similar action against the US on October 8.
The lira was trading at TRY1 to $0.2720 on October 12, down from $0.2753 on October 8, according to Oanda.com.
The consequence of these diplomatic troubles is that steel producers in Turkey have fallen quiet in the deep-sea scrap markets and have not made any bookings for a while.
The Turkish lira continued to weaken through to the end of the year, increasing local rebar prices in lira to the point that the construction sector in Turkey started to complain.
But the steel industry rejected these complaints about the rising prices of rebar and put the blame on higher costs for ferrous scrap and graphite electrodes.
Electrode shortage
Since Turkey has become a major producer of long steel through melting scrap in electric-arc furnaces (EAFs), it has been particularly hard hit by the recent sharp rise in the price of graphite electrodes used in these furnaces.
Graphite electrode prices went up to $22,000-40,000 per tonne in October from around $2,000 per tonne in 2016.
This has been driven by a reduction in electrode supplies from China after a government crackdown on pollution led to the closure of some electrode plants, sources told Metal Bulletin.

Cem Turken

cturken@fastmarkets.com

Published

Cem Turken

December 29, 2017

09:45 GMT

Mugla