“Russian steel (both semis and [finished] products) is being sold at such prices that paralyse all market dynamics here in Turkey,” Ugur Dalbeler, chief executive of Colakoglu and vice president of the Turkish Steel Exporters’ Association (CIB) tells Kallanish.
Speaking after a letter from the US deputy secretary of the Treasury to the Turkish Industry and Business Association (TUSAID) warned of the possibility of sanctions for companies working with Russian material earlier this week, Dalbeler stated that “Turkish steel producers became another victim of the current Russian-Ukrainian conflict … Russian steelmakers are extremely limited in export options with Turkey the only option left in this part of the world, forcing producers to offer at prices way below the market level, with huge dumping margins, making Turkish mills impossible to compete.”
This is forcing Turkish producers to reduce output, to the extent that October and November is looking likely for substantial production stoppages, as steel output in Turkey already dropped over 13% in June and 21% in July, as Russian mills seem to have no bottom to their prices, he says.
Due to their ties with the US and EU, some Turkish companies decided not to get involved with Russian imports in order not to lose these markets, while some are hesitant. This limits Russian exporters’ options, forcing them to reduce prices further.
“For example, Russian slab prices are at the same levels as the US or EU shredded scrap prices and lower than pig iron prices, HRC prices are the same level as Russian billet pirces, but cheaper than Turkish billet prices, and we know that these levels are way below their domestic prices,” Dalbeler explains.
But the Turkish steel producers’ troubles with Russian ties do not stop here. While some countries, like Canada, are already declaring that they will not allow imports of rebars rolled from Russian billet, more such investigations are likely to spring up. But Turkey has been dependent on Russian feedstock historically, and with around 7 million tonnes of Russian and Ukrainian feedstocks not being possible to obtain, Turkey is forced to look for alternative options, which are further away and expensive.
“It is another handicap for Turkey in the international market besides cut-throat competition it faces in the domestic market. Turkish steel producers today became another victim of the current Russo-Ukrainian conflict,” he concludes.