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Turkey’s elections expected to bring clarity to steel market

Keywords: Tags  steel, Turkey, mayoral elections, rebar, hot-rolled coil, AK Party, AKP, Turkish Prime Minister Recep Tayyip Erdogan steel prices

BURSA, Turkey — Turkish steel market activity has slowed ahead of the country’s mayoral elections, with market participants holding wait-and-see positions in a sector that lacks direction.

Turkish rebar has fallen to $567 to $572 per tonne ex-works from $585 to $595 in early January, while hot-rolled coil has slipped to $550 to $565 per tonne ex-works from $600 to $610 in the same comparison.

Some sources expect consumption to increase after the March 30 elections as the uncertainty will be over and market participants will need to replenish their stocks. However, other sources expect the Turkish steel market to be slow in the second quarter and beyond, with economic sentiment unlikely to improve after the elections and before the summer holiday season starts.

The elections may mark an important turning point in the country because the outcome could result in significant national policy changes.

The country’s ruling AK Party (AKP) has been in power since 2002, but corruption investigations that began Dec. 17 into the families of some party members have rocked the AKP and cost it some popular support.

Although the mayoral elections have no direct effect on the national government, the business environment in Turkey could change if the AKP were to lose some of its power base. For example, foreign investors could hold back until a general election—slated for 2015—is held and the views of a new administration become clear.

Several flat steel traders told AMM sister publication Steel First that demand will improve after the elections, but buyers will wait until the results of the popular vote are clear.

“Investments are being postponed. Buying is slow, and there is no activity in the market,” a Turkish trader said. “The elections cause fear in the market; nobody knows what will happen on April 1. If I knew, I would be sipping a drink in the Bahamas now rather than sitting in the office.”

A project manager at a company with investment plans in Turkey said that construction activity was on hold until after the elections. “(There is) nothing new—nothing newsworthy before the elections,” he said.

Demand for long steel products also is on hold until after the elections, but buyers are expected to return to the market once the results are clear and a price direction can be discerned, a market participant said.

The market will recover if the current authorities remain in power, according to a Turkish trader who sells long steel products domestically and for export.

“I think that since (Turkish Prime Minister Tayyip) Erdogan let American warships through the Bosphorus (strait), his party will win these elections and he will get a fresh, strong mandate,” a trader selling billet into Turkey said.

Cem Turken and Alona Grynenko contributed to this story.

A version of this article was first published by AMM sister publication Steel First.

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