Turkish exports of flat products fell by almost one-third to
410,000 tonnes in first quarter of 2012 against the
corresponding period last year, according to newly published
data from Istanbul Minerals & Metals Exporters Assn
Turkish flat-steel producers acknowledge they cannot compete
with Russian and Ukrainian imports on price, despite their
advantage in terms of delivery and tax costs.
"We cannot compete effectively with CIS suppliers in the export
market yet, because we are not able to reduce our production
costs as low as Russia or Ukraine," an export manager with a
Turkish steelmaker told Metal Bulletin on Thursday April 26.
"Russian and Ukrainian steelmakers produce steel from locally
mined iron ore, while both types of our plants [blast and
electric arc furnaces] depend on imported iron ore or scrap,
which naturally results in higher costs for us," the export
"[Russia and Ukraine] also have huge reservoirs of oil and gas,
while we import almost all of our requirements," he added.
Turkey's flats industry is still in its infancy, building on
the swift development of mills such as Erdemir since the start
of the global financial crisis in 2008.
Its development compares with the more mature long-steel
sector, whose products such as rebar were particularly
competitive in the Gulf Co-operation Council nations until the
property bubble began to collapse in some parts of the UAE.
Despite import duty of around 9% imposed on Russian products
entering Turkey, a healthy flow of material is still apparent,
The market development manager of a trading company added that
output from Russian or Ukrainian mills can be 5-6 million tpy,
while the highest output so far achieved by a single plant in
Turkey is just 3 million tpy.
"Production scale is another factor which can affect production
costs," the manager said.
"We have five suppliers of flat products in Turkey - Erdemir,
Isdemir, MMK, Colakoglu and Toscelik - of which [the latter]
three plants have only come on stream recently. Naturally,
their production costs are higher than those of their
competitors, which have long histories," he explained.
An Iranian flat products trader told Metal Bulletin that
Iranian traders usually import hot rolled coil (HRC) from
Russia through the Caspian Sea at around $50 per tonne cheaper
than similar material from Turkey.
"We check Turkish prices now and then," the trader said. "We
had an offer for HRC at $700 per tonne cfr for delivery into
Iran's northern port. Turkish suppliers cannot offer the same
material for less than $750 per tonne."
The cost of sea freight is also a key factor for Turkish
producers, the trader added.
"There is a sea-freight rate of just $20-30 per tonne for
shipment of material from the Russian port of Astrakhan on the
north of the Caspian Sea to Iranian ports on the south. But the
rate is $50 per tonne or more for shipment of material from
Turkey to Iranian ports in the southern Persian Gulf," he said.
Long steel exports
Although Turkey's flat-steel exports fell year-on-year in the
first quarter of 2012, the country's long-steel exports rose by
26.1% to 3.2 million tonnes.
Rebar exports leapt by 30.1% to 2.4 million tonnes, profiles
increased by 15.8% to 461,000 tonnes, and wire rod exports
increased by 16.9% to 293,000 tonnes, although semi-finished
product exports fell by 12.4% to 497,000 tonnes.
Overall, Turkish steel exports have grown. IMMIB figures show
the sum of semis, longs and flats reached 5 million tonnes, up
by more than 10%, with a value of $4.3 million, up by 11%, in
this year's first quarter.