Posted on 04 Dec 2018
Turkish producers of hot rolled coil continued to adapt to the challenging market conditions last week by reducing their prices further. This has been a successful solution so far, as two of the three Turkish primary coil producers appear to be well sold out, Kallanish learns.
Turkish domestic HRC prices softened further last week, with sales concluded at $515-525/tonne ex-works, despite official offers from one of the mills still pegged at $530/t ex-works, sources say. Cold rolled coil sales have been concluded at $590-600/t ex-works but, like HRC, CRC is also offered at slightly higher levels.
Export prices have also softened, with sales concluded at $500-510/t fob, although larger consignments still command a discount. Offers were higher, at $505-510/t fob from one producer and $510-515/t fob from another, traders say.
The reduction of prices has enabled mills to close their order-books for December and some part of January, but it has brought the price close to full cost levels, and in some cases slightly below. The electric arc furnace-based mills appear to already be biting into their costs, making a reduction in scrap prices even more desirable.
Falling HRC prices have also pushed Turkish mills' slab bids considerably down, to around $420-430/t cfr, countering offering at $450-460/t cfr, and resulting in stalemate for now. However, market participants expect both buyers and sellers to move their indications closer to the "…golden middle" this week, and bookings to take place at around $440-445/t cfr, as both sellers and buyers need to close transactions.
Demand has not changed much and remains weak, with mills expected to prolong winter maintenances somewhat as a result. Ongoing issues with financing, and processors' and end-users' bankruptcies are thwarting the market. A recovery is not anticipated in the short-term unless there is a significant change in international trade dynamics, leading to higher demand for Turkish primary and processed material, traders conclude.
