Decrease in steel export prices in Turkey is paying off

Turkish exporters of hot rolled coil products tried to boost sales by lowering prices early last week, which bore fruit with several large sales to Asia last week.

Reduction of about US $ 10 /t for late May /early June loading of material last week to about US $ 510-520 /t in Turkey negotiations started. According to traders, sales were concluded at even lower levels, equivalent to $ 505-510 /t FOB, for Asian destinations. As expected, the flexibility of pricing and loading times in Turkish factories adds a competitive advantage in direct negotiations with buyers, as producers are willing to push large tonne orders.

But European sales remain muted as competition from European European manufacturers drives down prices for Turkish suppliers. The Italian manufacturer is now offering the equivalent of EUR 465 /t European ports (USD 526), ​​which is at least USD 10 /t less than Turkish HRC's acceptable export prices. But that could be overcome in the coming weeks, given reports from some traders that Turkish factories are ready to sell at $ 500 per ton fob.

In northern Europe, Turkey's HRC continues to face challenges from a major Russian producer, whose bids also fell from $ 500 /t in St. Petersburg a week earlier to $ 495 /t last week. There are signs that there is still room for declining sales, traders say. For northern Spain, the same seller quotes € 472-475 /t CFR.

Despite the willingness of Turkish factories to lower prices to compete, their cash production costs, estimated at $ 490 per tonne per year, are growing very high. The moment prices fall below the level of costs, factories can slow down production, leading to a reduction in supply. Coupled with declining margins and stocks in China, some traders believe this may provide a basis for a decline in market sentiment. This could trigger a new wave of restocking and subsequent price increases in late July-August.