Turkish hot rolled coil buyers are closely monitoring developments in China, fearing a possible downtrend. This concern has led to a delay in domestic bookings, with weak demand expected to persist for another few weeks, market participants inform Kallanish.

Turkey's central bank maintained its key rate at 45% on Thursday, marking the end of its monetary tightening cycle after eight consecutive months of hikes, in line with expectations. The bank says the rate will be maintained until “there is a significant and sustained decline in the underlying trend of monthly inflation”.

The municipal elections on 31 March are also contributing to the weak demand situation. Opinions regarding developments following the election are divided. Some anticipate increased demand after the election as both the ruling Justice and Development Party (AKP) and the opposition are focusing on infrastructure improvements. Others predict that after the election, the AKP will implement a stringent economic programme, leading to a cooling economy, decreased demand, and an expected hike in energy prices from April.

However, the main factors impacting demand during the current week were the direction of HRC prices from China and imported scrap prices in Turkey.

“Turkey has very serious economic problems and, therefore, there is very low activity in the market. That's why all eyes were turned to good news from China and a revival of the global market. But when it became clear that this wouldn't happen either, a thought emerged that things wouldn't improve [in Turkey],” a supplier source says.

While some market participants predict a stable market until the elections, others indicate a downtrend.

“Demand is weak. March expectation is a clear price decrease trend,” an import supplier notes.

“Price levels will be the same until the election,” another supply-side source observes.

“It is hard to say. It would be like that [stable prices] if all Turkey’s producers were fully booked until May. But now, only one [Turkish] producer is full for April, and therefore we may see aggressive offers [from producers in Turkey with March-shipment availability],” another supply source opines.

“If until 5-10 March, China’s prices are stable or up, Turkey’s producers will close April HRC sales very fast [because of delayed demand]; otherwise, customers will wait more to achieve better prices,” a buy-side source says. “Turkey’s producers would monitor the HRC prices from China to make the decision on imported scrap purchasing. So, the domestic HRC price trend would depend on both imported scrap and China’s HRC prices in the next two weeks,” the source concludes.

A market participant indicates availability at $680-700/t ex-works from domestic producers for April shipment compared to $690-705/t ex-works a week earlier. However, in some cases, March shipment was also reported as available, which may exert additional pressure on prices.

Offers of China-origin HRC stood at $590/t cfr Turkey, but have not attracted deals. “Bids from Turkish customers were $20-30/t lower than the offered price, which is not a positive sign,” a supply source says.

HRC from South Korea and India was indicated at $700/t cfr and $660/t cfr respectively, with those levels not workable for buyers.

For exports, demand was also weak, with HRC reported available at $670/t fob Turkey.

Turkish HRC prices, 22/02/2024
HRC Price, $/tonne, cash W-o-w change, $/t
Domestic market, ex-works 680-700 -5-10
Exports, fob 670 -10-20
Import, cfr 590  -5

Source: Kallanish market survey