Due to contraction in the domestic market and ongoing protection measures in global markets, 2019 looks to be a tough year for the Turkish steel sector, according to Halil Sahin, CEO of one of Turkey’s major billet and bar producers, Izmir Demir Celik (IDC).
“Sharp exchange rate fluctuations created problems in the Turkish automotive, construction and white good sectors in 2018, which are the Turkish steel sector’s top customers. This led to a significant shrinkage in domestic steel demand last year, while protection measures in the global markets also pulled down demand notably,” the IDC CEO said at the company’s annual report presentation.
“Although prices were down last year due to the contraction in demand, raw material prices and other costs didn’t follow the same trend. So, the sale price-manufacturing cost margin turned to negative in the last quarter,” Sahin said.
The notable 14.9% shrinkage in domestic demand, however, was compensated by the rise in export sales last year. IDC sold 1.51 million mt of finished products in 2018, up 4.2% year on year, while export volumes rose by 2% to 345,989 mt.
IDC’s billet production fell by 7% on year to 1.23 million mt, while rebar output was up by 7% to 977,629 mt. A total of 307,593 mt of rebar was produced by IDC’s contractual partners during the period. The company also produced 265,636 mt of profiles during the period, notably up 20% year on year, IDC noted.
The company reported a net loss of Lira 341.7 million ($63 million) for 2018, compared with a Lira 15 million profit reported in 2017, due to a heavy financing burden, the company said. IDC’s turnover rose to Lira 4.66 billion ($868 million) in 2018, up 57% from 2017.
IDC has 1.5 million mt/year of melting capacity and produces around 3.5% of Turkey’s total crude steel, while its rolling mills have production capacity of 1.4 million mt/year.
— Cenk Can