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First Turkish mill sets up Houston trading office

Keywords: Tags  Colakoglu, rebar, hot-rolled, steel trader, import, mill direct, Europe, Jose Gasca Catherine Ngai

NEW YORK — Steelmaker Colakoglu Metalurji AS has established a Houston trading house, making it the first Turkish mill to sell into the United States from a domestic location.

The Houston office, which expects to begin sales of hot-rolled coil and reinforcing bar in early 2013, will sell mill direct to buyers across North America, Jose F. Gasca, chief commercial officer of Colakoglu’s Houston operations, told AMM.

"We opened an office in Houston. Why Houston? It’s a logistical advantage that’s hard to find in other places, in other states or in the continent," Gasca said. "The office isn’t going to be only focused on the U.S., but the entire continent." According to Gasca, product from the Turkish steelmaking operations will be shipped to Houston, and scrap metal and other raw materials will be sent back to the mill on the same vessels.

"The idea is to coordinate the purchase of raw materials for the mill, so we’re not only buying scrap, but also slabs and billet. We like the idea of having some coordination from here," Gasca said.

Gasca, who previously served as managing director of Coutinho & Ferrostaal Inc. (C&F), was with the Houston-based trading house for nine years and was responsible for certain markets in Europe, the Middle East and Asia for both flat and long products. He said he left C&F in September 2011 to start his own company, X Steel USA LLC, which he recently left to oversee Colakoglu’s Houston operations.

Istanbul-based Colakoglu’s decision to establish a Houston trading office comes at a time when more foreign mills are setting up their own domestic offices, a move that some say can effectively cut out the middle man—the steel trader. Some traders told AMM the trend was a concerning one, because importers already squeezed by tight margins could lose opportunities to import from certain overseas suppliers if the mills set up shop domestically.

But Gasca denied rumors that Colakoglu’s Houston office could disrupt trading patterns.

"I think I understand well the irreplaceable role of a trader. Traders offer many advantages, lots of market knowledge and lots of logistical synergies that are difficult to develop from one day to another," he said. "We think our role is to complement markets and provide better customer service by being close to customers and our suppliers."

Others expressed concern that the move comes at a time when the U.S. long and flat products markets are characterized by oversupply and weak demand, leaving some wondering how a new player could change the current balance.

But with the Houston office focused more on sourcing raw materials than selling steel products, Gasca said, he does not expect the new operation to have a significant impact on the market fundamentals.

The Houston office, which is set up but not yet selling, is focusing through year-end on verifying to would-be customers the quality of product from the Turkish mill, as well as developing logistics and financing plans.

"We’re trying to monitor international markets for the behavior of scrap, slabs and billets," Gasca added. "We’re not really in a rush to start selling or to start buying aggressively, and that’s not our objective."

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