Turkish Trade Ministry, steelmakers agree on price control mechanism

The Turkish Trade Ministry and steelmakers, which held a meeting at the ministry March 2 about steel supply for reconstruction projects in earthquake-affected regions, have reached an agreement on establishing a price control mechanism to prevent speculation.

According to an information note from steelmakers seen by S&P Global Commodity Insights, the housing development administration of Turkey is planning to build 350,000 houses in the region within a year.

This will require 5 million mt of steel products, including 3 million mt of rebar, 750,000 mt of wire rod, and 1.25 million mt of sheet metal, according to calculations done at the meeting.

This could easily be met by the domestic market, steelmakers said, although they also brought up the increase in raw material and product prices in the post-earthquake period.

“By detailing the cost items in the production phase, attention has been drawn to the share of raw materials and energy in costs, and our producers have promised that no increase will be made in rebar prices, except for fluctuations in raw material prices,” they said.

Demand for steel for reconstruction projects has seen imported billet and scrap prices rise in recent weeks.

Platts, part of S&P Global, assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $452.50/mt CFR March 1, $27.50 above Feb. 1, while its CIS export billet assessment was at $617.50/mt FOB Black Sea, up from $560/mt CFR Feb. 1.

“An agreement was also reached at the meeting on preventing speculative steps that may arise from sellers other than manufacturers and providing a price control mechanism,” producers said in the note.

The steel quantities needed for reconstruction projects could be obtained by producer organizations by prioritizing the domestic market, as in the case of containers, the producers noted.

Another meeting will be held at the Ministry of Commerce March 7 to establish a similar system for rebar supply, as in the case of container production, or to discuss and clarify other applications that could be created, according to the note.

— Viral Shah, Cenk Can