Ahmet Demirel: Prices of CRC in Turkey will rebound in H2 2013

Asian Metal: Mr Demirel, thanks for accepting the interview with Asian Metal, could you please make a brief introduction of yourself and your company?

Ahmet: I get my Bachelor’s and Master’s degree from Texas Tech University, USA. I have been in steel business since 2001.

Our company, DEMA IC DIS TIC LTD STI, is a family owned one. My father Faruk Demirel and I own the company.

We have had Flat Steel business since 1973. We are stockholders. We not only buy materials from Turkish mills but also import from Europe, Russia as well as Ukraine, then sell them all over Turkey.

Asian Metal: In general, which country do you import CRC from?

Ahmet: We mostly import from Europe (secondary grade) and primary materials from Russia and Ukraine.

Asian Metal: Can you explain to us why you choose these countries?

Ahmet: Of course. Firstly, materials from these countries are near Turkey. The transportation expenses are not so high. Secondly, materials from these countries are duty free. Thirdly, CRC materials from Europe, Ukraine and Russia are very cheap. These are the main reasons why I choose them.

Asian Metal: Whether CRC materials from these countries are of high quality?

Ahmet: Those from Ukraine are not so good, but their quality is enough for pipe makers in Turkey who use CRC. We mostly import secondary materials from Europe, and there are no problems for materials from Russia.

Asian Metal: How about your import volume (CRC and HRC) in 2012?

Ahmet: Our import volume has decreased since 2008 because Turkish mills increased production of flat steel products.

We imported a very small amount of materials in 2012. As I mentioned, Turkish mills produce enough materials for local markets.

Asian Metal: How many steel mills can produce CRC and HRC in Turkey?

Ahmet: There is only one producing CRC, Erdemir, which is the biggest Turkish steel mill. There are mainly four ones producing HRC: Erdemir, Colakoglu, MMK, Tosyal.

Asian Metal: How about the current steel market situation in Turkey?

Ahmet: The price of HR materials is USD640/t, that of CR ones is USD750/t and that of HDG ones is USD800/t. Prices of them are on a stable trend, because steel prices depend on the scrap price, whose prices are relatively stable for the time being. Only Erdemir produces materials from iron ore and all the other mills produce material from scrap. Prices of HRC influence those of CRC, and the former ones are about USD100/t higher than the latter ones.

Asian Metal: As I know, Turkish government increased import duty for flat rolled products with width smaller than 500 mm, which took effect on January 1, will the local steel mills be benefited from the increased import duty?

Ahmet: Of course. When the policy takes effects, more buyers will purchase materials from local markets. It is a policy to product Turkish steel mills. In addition, the import duty for flat product mostly took effects on pipe makers because pipe makers mostly use these materials but there is a gap for materials between 500-600 mm. Therefore, pipe makers buy 590 mm materials from Russia and Ukraine for duty free.

Asian Metal: What do you mean there is a gap for material between 500 –600 mm?

Ahmet: I mean it is duty free for materials between 500-600mm, but the duty rate was once 5% for HRC materials above 600mm and 9% for CRC ones. Actually, it has also been changed, so it is 9% for both of them at the moment.

Asian Metal: The price of raw materials like iron ore is on a downward trend at the moment, so do you think the price of CRC in Turkey will decrease in the near future?

Ahmet: Some traders think the price will go down and also, I do not think the price will drop on a large scale, because there is not strong demand in Turkey right now but there are not so much materials, either. Traders and manufacturers buy only limited amount, so we do not have oversupply problem like China for the time being.

I deem that the price will go down by USD20-25/t after March.

Asian Metal: Do you think whether the global steel industry has chances to rebound in first half of 2013?

Ahmet: I believe the prices will be around the level +/- USD20/t in first half of 2013. The price of CRC will increase in the 2nd half of 2013 when the economic crises in Europe close to end. We are very close to Europe, so European economic crises greatly influenced on Turkish market.

The world becomes smaller and smaller every day because of the Internet. The economic situations in China, USA and Europe take effects on every part all over the world. We cannot separate Turkish economy from that in Europe, US and China. We follow every event and situation in these countries. We even have to follow the New Year festival time to do projection about the steel business and price in China and also in our country. When the demand and price in these big countries go up, the price in Turkey will also increase.

Asian Metal: In 2013, do you have any project related to your trading business? Will you consider stepping into Chinese market, if so, what is your specific plan?

Ahmet: I believe in new future (till 2015) Turkey can produce enough materials for itself and will start to export more materials to Europe and Middle East markets. So we are thinking about exporting materials rather than importing materials. In addition, importing price fluctuations from China are so hard to predict for us, because shipment of materials from China takes almost 2 months, which is really a long time and during that time price changes almost every day.

Asian Metal: Thank you so much for your cooperation with Asian Metal and wish your business prosperous in the coming days.