CIS Steelmakers Pressured By Turkish Market Crisis But Low Production Costs Offer Advantage

- Oct 12, 2018-

Fast Markets reported that over the first nine months of 2018, Turkey exported 11.4 million tonnes of steel products, up by 12.5% year on year, according to Turkish Steel Producers Association. In September, shipments accounted for 2 million tonnes. European markets such as Italy, Belgium and Spain were the main contributors to growth, according to the head of the Turkish Steel Producers Association, Adnan Aslan, quoted by the local news provider.

Turkish producers plan to expand into the markets of Southeast Asia, West Africa and South America, Aslan said in his statement.

In September the Turkish Steel Producers’ Association forecast Turkish steel exports would continue growing in the next few months because products will be offered at competitive prices due to the weakness of the Turkish lira.

The lira has lost a significant amount of value since early August, when political tension between Turkey and the United States worsened.

The lira was trading at TRY100 to USD 16.26 on October 8. It had been trading at TRY100 to $18.98 on August 8, and TRY100 to USD 21.84 on July 8, according to exchange rate website

Asked whether this situation would influence steel production volumes and exports from the CIS region, CIS producers said it would be unlikely, despite the fact Turkey started to buy less billet in recent months.

A CIS-based producing source said on the sidelines of Irepas said that “Having knocked out Turkey with a 50% import tariff, the US also knocked out Iranian exporters with sanctions, so the CIS will replace these volumes.”

Yet, the competition will have a significant negative effect on prices, sources said.

Another producer said that “And the Turkish will lose because CIS producers’ production costs are much lower because they use their own iron ore and coking coal for production, while Turkey uses import scrap.”

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