EU mills not playing ‘fair’: Colakoglu

Turkish steelmakers could easily establish a dumping case against European mills based on their recent flurry of hot-rolled coil (HRC) exports into the country, Colakoglu managing director Ugur Dalbeler told Argus on the sidelines of an industry event in New York yesterday.

Colakoglu is one of Turkey’s largest steelmakers, with crude steel capacity of 3mn t/yr. Turkey recently terminated its steel safeguard investigation as it did not find dumping, in line with World Trade Organisation rules. Other regions have opened cases without proving dumping.

European steel association Eurofer is pressuring the European Commission to amend its global HRC import quota to a country-by-country basis, citing the increase in Turkish volumes in recent months. Turkish HRC imports into the EU ballooned by 53pc year on year to 1.4mn t in the first four months of 2019.

But Dalbeler said Turkish volumes are only increasing because of the existing European dumping duties on other primary exporters, such as China, Iran, Russia and Ukraine.

One large Italian re-roller sharply reduced its slab imports over the first three months, given high prices, opting instead for imported coil and driving a significant portion of the increase in HRC imports into the EU, Dalbeler said.

He also said that it was unfair for EU mills to target Turkey after they have enjoyed it as their largest export market for the last decade.

“It’s two-way traffic. If you ask others to behave fairly and then you don’t, there’s bound to be a collision”, he said.

The EU has shipped around 56mn t into Turkey over the last decade, while Turkey has shipped 28mn t into the 28 EU members, according to Dalbeler. And over the next few months European shipments to Turkey are likely to increase given the weak EU market over recent months.

Although Turkey’s market has contracted significantly in the last year or so, the weak currency has kept imports at bay, allowing mills to maintain production. Turkish producers as a whole are at around 75pc of capacity.

The primary problems have been on rebar, where export destinations have been limited by trade actions and weak prices, and the domestic market is down by around 60pc.

Turkish mills are not selling into the US despite the reduction of the Section 232 tariff back to 25pc, as they would have to do so below domestic levels. And they cannot increase shipments into southeast Asia much more, while safeguards cap levels into Europe. As a result shipments are likely to increase and prices could come under more pressure.

At the same time scrap prices could slip based on soft domestic markets in export regions. However, blast furnace mills are likely to ramp up their scrap charge given the squeezed ratio to iron ore, which could bolster demand. While rebar shipments have been more difficult, Turkey has ramped up billet and wire rod exports.

HRC prices should be underpinned by firm raw material costs, according to Dalbeler. After a sustained bout of destocking buyers will return to the table, which will increase demand and support pricing. With blast furnace-based mill margins now in the red, it makes little sense for them to keep competing at such levels.