Boston, MA -- (SBWIRE) -- 08/15/2012 -- BMI's Turkey Metals Q312 Report examines recent growth trends in the steel industry, but warns that a contraction in the European construction industry will impact negatively on Turkish rebar exports, which represent the sector's largest income earner.
The report examines how the changing external macroeconomic environment is affecting steel production margins as well as Turkey's position as a leading steel exporter. The report also analyses the investment strategies being employed by the leading players in the Turkish steel industry, as they seek to maximise the growth opportunities offered by the local market.
In the first four months of 2012 Turkey produced 11.9mn tonnes (mnt) of steel, up 11.4% y-o-y. This followed a strong 2011 when output grew 17.6%. However, negative market conditions in flat steel sector have influenced the output volumes. Electric Arc Furnace (EAF) output, which is focused on long products, comprised 75% of crude steel output with the rest produced in blast furnaces. EAF production was up 15% and Basic Oxygen Furnace (BOF) was up 7%, giving support to Turkish scrap feedstock over iron. Turkey's steel trade surplus widened in Q112 as exports continued to pick up pace while imports fell amid increased self-sufficiency. Steel product exports rose 10.9% y-o-y to 5mnt, while the value of exports rose 11.3% to US$4.28bn. Meanwhile, imports of steel products fell 4.7% y-o-y in Q112 to 2.67mnt, while the value of imports declined 9.3% to US$2.64bn. Imports from the Commonwealth of Independent States (CIS), which accounted for 36% of the total, fell 21.7%, while imports from the EU, representing a 46% share, fell 12.8%. Consumption has been buoyant, but BMI expects a moderation.
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In the aluminium sector, the country's sole 60,000 tonnes per annum (tpa) Seydisehir smelter - which has been operating at maximum capacity over the past five years - is unable to fulfil all the country's aluminium requirements. Smelters will also face increased competition from re-melters.
Due to the increases in capacity utilisation and product range, Turkish crude steel production is expected to rise further and reach 36.1mnt in 2012, a rise of 6% y-o-y. This is a downward revision from 37.1mnt we previously forecast.
Slower EU economic growth, unrest in Syria and tightening sanctions against Iran are likely to undermine Turkish margins. Turkey's reliance on rebar exports will mean it will have to look further afield for growth, which may be challenging.
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