The Turkish export market for hot rolled coil remains quiet, amid dried-up external demand and relentless competition from other lower-priced sources. Having focussed on domestic sales in the last three weeks, Turkish mills appear to have withdrawn from the export market, Kallanish notes.
Turkish indicative HRC offers remain at around $500/tonne fob, but market participants note the mills are not eager to sell, as September production allocations are almost closed, and there are no enquiries from buyers. Turkish mills will try and sell remaining volumes in the domestic market, before marketing their October production tonnages. This could take a while, as most of its markets look to be settling into a lull for the whole of August, one trader notes.
Turkey’s largest buyer, the European HRC market, continues to deteriorate, with expectations of a rebound long forgotten. Although there is considerable volume of delayed demand forming, based on previous years' indications, there is little evidence showing that the EU market will continue following its traditional patterns. Trade restrictions and the automotive manufacturing sector’s unexpected nose-dive there are altering stockists' and major distributors' restocking patterns, and pressuring prices. As European HRC trade is now almost entirely focussed on internal sales, Turkish offers to Italy, for example, remain uncompetitive.
The lack of prospect of European prices rising significantly enough to be attractive to Turkish exporters is an undermining factor in Turkey's flat producers' September production plans. Having bought slab for late September/October arrival at around $435/t cfr, mills need to sell at a minimum of $510-515/t fob or exw. If they sell at a cost price of around $500/t they may cover costs. Below these levels they will begin to incur losses.
During the summer so far, Turkish mills have been producing at reduced levels, helped in part by a major Turkish integrated producer's blast furnace issues, which has slashed output by around 200,000 tonnes. September output is set to restore higher pre-summer levels, while both domestic and export demand continue to shrink, possibly forcing deeper output cuts in Turkey, market participants say.