Turkish steel mills under pressure from low-priced Asian imports: panel

Turkey's steel mills have remained under pressure from low priced imports from Asia recently, especially from China, while India has also became an important threat in global markets, according to panellists at the S&P Global Commodity Insights Istanbul Ferrous Metals Briefing.

Highlighting that China had focused on exports in recent years due to the slackness in its domestic market, A1 Metal Trade General Manager Mert Damar said Turkish steelmakers had been facing difficulties in competing with Chinese mills' low priced offers as they had cost advantages.

"Indian mills have also raised their market shares in Turkey's export markets in recent years. They could become a huge threat to Turkish producers in the coming years with their high steel production capacity," he said.

Bastug Metalurji Vice General Manager Emrah Ugursal also said Chinese steel exports had become a big threat for Turkish steelmakers in the domestic and export markets in recent years.

"Even Egypt and Morocco have become one of European scrap suppliers main short-sea export destinations, which increase pressure on Turkish steel mills" Ugursal said.

Platts, part of S&P Global Commodity Insights, assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $383/mt CFR May 7, down $1.50/mt on the day.

Noting that regional conflicts and logistical problems had been affecting trade and prices, as well as demand, London Metal Exchange Head of Corporate Sales Christian Mildner said that steel mills should hedge their price risks and gain protection from adverse price movements in a fluctuating market.

Hedging is the process of offsetting the risk of price movements in the physical market by locking in a price for the same commodity in the futures market.

Near-term scrap futures contracts on the LME remained largely flat in the week to May 2, while the weekly trading volumes continued to perform strongly, reaching record highs in April.

The LME CFR Turkey scrap futures contract, which settles against the monthly average of the physical Platts CFR Turkey premium HMS 1/2 (80:20) assessment, saw a record 1.33 million mt traded in April, the highest figure since the contract was launched by the LME in November 2015.