Turkish Steel Exports Increased 27% in 2018
As world’s eight-biggest steel producer faced new steel and aluminum tariffs by United States in August, Turkey’s steel exporters have been shifting their attention to different markets. During first seven months period of 2018, Turkish steel exports experienced 27% increase compared to same period from last year with 8.4 billion tons. Analysts expect Turkey’s steel export shipments to exceed 11.5 billion from last year as global demand is booming.
In 2017 Turkey’s steel exports increased to seven of its top 10 steel export markets. Exports to Singapore were up by 4378% from 2016, followed by Italy by 91%, and Spain by 82%. Turkish steel exports to United Kingdom, Romania also experienced substantial increases (44% and 42% respectively), whereas Egypt, United States and Iraq saw largest decreases. Since 2016, Turkish steel exports have been consistently increasing, yet recent devaluation in Turkish lira pushed production costs even lower.
Turkish Steel Exports Increased While Markets Expect Supplies To Shrink
Seth Rosenfeld, an analyst at Jefferies International, believes “global demand is strong enough that it can serve as a mitigating factor, offsetting Turkish volatility. There’s enough demand that these dislocations can be absorbed elsewhere. European safeguard measures should be sufficient to dissuade a surge in imports, but within that quota, various countries such as Turkey, India, China and Russia can compete for market share. With current currency tailwinds, Turkey may be able to take more share because it has a more competitive cost base.”
As Beijing’s anti-pollution intensifies, China expects to reduce steel exports as country shutters more plants this winter. Chinese Ministry of Ecology and Environment has drafted a new environmental plan in July for Changzhou, home to steel mills and steel processing firms. More than 400 companies in Changzhou will have to enforce the production cuts (with varying rates). Due to concerns over supply shortages in the market, steel prices rose to a 5-1/2-year high last month.
According to Philip Ngotho, an analyst at ABN Amro Bank NV, “The tariffs on Turkey won’t form a big threat to Europe. Europe has measures in place to limit imports of steel, so that will continue to offer some protection from potentially cheaper and more steel from Turkey.”
The European Union recently implemented 25% tariffs to volumes that exceed the historical averages, which is designed to protect the market against flooding. Current devaluation of Turkish lira pushed cost of Turkish steel, giving local producers a competitive edge in the market. Taking geographic proximity and historically consistent high demand levels from Europe into account, Turkish steel exporters and European businesses may find current conditions rather potentially profitable.