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Kallanish Kallanish

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September, 22nd 2020

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OCT 16
14:29

Turkish HRC exporters face price reductions again

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Turkish exporters of hot rolled coil are facing growing challenges.  These include the promised doubling of US Section 232 import duty back to 50% and an abrupt closure of negotiations of a possible $100 billion trade deal, in response to Turkey's Syria military actions.

Already under pressure from weak demand and relatively high production costs, Turkish HRC exporters are trying to book large tonnages at yet lower prices. Buyers however are asking for small tonnages at low prices, Kallanish learns from market sources.

Offers to Egypt at $415/tonne cfr for 20,000-tonne consignments, $10-15/t down week-on-week, are being countered with requests for smaller 3,000-4,000t consignments at slightly lower prices, sources say. With freight rates increasing significantly for lower tonnages, this would net back to around $390/t fob, and as yet is not accepted by mills.

Ongoing negotiations with European buyers were jeopardised by Washington's announcement of new sanctions, sources note. These were hovering at around €375-385/t ($415-426/t) cfr. One trader also confirms failed negotiations with US buyers, as Turkish material once again may become unworkable in the US, although there is still no firm understanding that the sanctions will be implemented. In this case the current stalemate is a pause, rather than a halt to these negotiations, the trader adds.

Demand remains weak, and with Turkish import and domestic scrap prices having consolidated, it is becoming increasingly difficult to continue reducing prices in order to gauge sales, especially in the climate of relentless competition. Prolonged maintenance outages during the dark winter months will ease the pressure somewhat, but a more sustainable solution is begging to be found, sources say.