Colakoglu sets maintenance for May, raising HRC capacity 50% in Q2 2022

One of Turkey’s largest steel producers, Colakoglu, is planning to pause output at its rolling mills in May for maintenance work, S&P Global Platts learned from Ugur Dalbeler, CEO of the company, on Feb. 5.

“It is a planned maintenance,” he said, adding that they can reevaluate the timing of the maintenance according to market conditions. The executive, however said he couldn’t give an exact time for the duration of the maintenance.

An informed industry source said the maintenance could be long enough to create some some supply problems in the market. “This could also support mills’ HRC pricing at that time,” he said.

Higher demand, shortages and higher scrap costs pushed Turkish mill HRC prices above $800/mt in December, as Platts has reported. But, Turkish mills’ HRC prices have begun to soften gradually in recent weeks, due to eased shortages, low demand both in the domestic and export markets, cheaper import offers, especially from China, and the notable declines seen in scrap prices.

Some Turkish mills have begun offering HRC at $770-$780/mt ex-works for May rollings, while some mills’ HRC export offer prices have fallen below $760/mt FOB.

An industry source said a major Turkish HRC producer even pulled down its HRC export offer price to $740/mt FOB on Feb. 4, while a service center manager on Feb. 5 reported hearing from a colleague in the EU that the mill recently offered HRC as low as $730/mt FOB to the region.

Taking into account the scrap price decline and Chinese mills’ notable HRC exports to Turkey in previous weeks with prices as low as $675-$685/mt CFR, Turkish mills’ new discounted prices are still considered high by some market sources.

Although some market sources are expecting Turkish mill offer prices to touch $700/mt FOB, these mills continued efforts to keep offer prices firm till the return of Chinese mills’ from New Year holidays, in expectation of a strong raw materials and finished product pricing sentiment after the return.

Also. there have been some delays in Turkish mills’ HRC deliveries in recent weeks, some re-rollers told Platts.

Some end users meanwhile have continued to claim that shortages and price rises in the market were arising from insufficient HRC production capacity in Turkey, and they have been criticizing the recent dumping investigation started by Turkey against HRC imports from the EU region as well as South Korea.

Turkish mills are denying this claim, saying the shortages arose from the sharp rise in end user demand after the ease of the pandemic and domestic mills mostly focused on meeting domestic demand.

Colakoglu to raise HRC output capacity by 50%

Major Turkish steelmaker Colakoglu has decided to raise its HRC output capacity by 50% with a new annealing furnace investment.

Ugur Dalbeler, CEO of the company told Platts Feb. 5 that their HRC production capacity will reach 4.5-5 million mt with this investment as of the second quarter of 2022. “We will continue our investments afterwards to raise our value-added steel production,” he said.

Colakoglu currently has bar output capacity of 1 million mt/year and HRC production capacity of 3 million mt/year.

With the notable rise in Colakoglu’s HRC production capacity and a new 2 million mt HRC mill project by another major Turkish steelmaker, Tosyali Demir Celik, installed HRC output capacity in Turkey is expected to reach 23 million mt as of the end of 2022.

— Cenk Can