EU focuses on exports as quotas rise and domestic demand slows

Turkish mills' hot rolled coil offer prices have remained relatively stable in recent days as domestic demand slowed and buyers focused on lower-priced import options.

Turkish mills have focused on export markets instead, as the increase in EU quotas is expected to support Turkish mills' export volumes and prices in the coming weeks, sources told S&P Global Commodity Insights on March 22.

The European Commission decided to allocate Russia's quota to other countries on March 15 after banning Russian steel imports. As a result, Turkey's hot rolled sheet and strip quota increased from 323,200 mt in the first quarter to 430,246 mt in the second quarter of 2022.

However, the sharp rise in HRC prices of Turkish mills significantly increased the buying interest for Chinese origin HRC in Turkey. According to sources, Turkish buyers have purchased around 400,000 mt of HRC from China in the last three weeks at competitive prices at low levels of $980-1,010/mt FOB.

"The HRC offer prices of Turkish mills, which increased to 1,300 mt EXW as of the previous week, are not yet accepted in the domestic market, as there are lower import offers," the manager of a leading Turkish pipe producer told S&P Global March.

“Also, we heard that Turkish producers' HRC offers of around 1,300/mt FOB have not been accepted by European buyers yet, due to the competitiveness of Indian and Japanese HRC offers,” he said.

However, he said he expects these levels to be adopted in the coming weeks as some usability issues may arise.

The manager of a Turkish HRC producer said that EU buyers who had booked some cargoes in the previous weeks have refrained from booking new position cargoes in recent days.

He said that due to the anti-dumping duty imposed on Turkish HRC, the level of $1,250/mt FOB has already been accepted by EU buyers, while $1,300/mt FOB level has been accepted in some markets outside the EU. He said that Indian, Japanese, Koeran, Taiwanese and Egyptian manufacturers are actively involved in the EU market, while Chinese manufacturers are actively selling to the Turkish and Egyptian markets.

A service center manager told S&P Global March 22, emphasizing that traders are having trouble getting letters of guarantee from banks, and that trading activities have been very slow in recent days, and HRC prices above $1,250/mt can easily be accepted in the domestic market. .