Turkey HDG exporters seek North America, MENA expansion

An incoming European anti-dumping probe into Turkish hot-dipped galvanised steel (HDG) imports may force Turkish flat steel re-rollers to seek alternative export markets, particularly in North America and the Middle East and North Africa (Mena) region.

The EU is by far Turkish exporters' largest market, accounting for 69pc of Turkey's 1.35mn t of exports last year. EU deliveries increased by 262,000t on the year in 2020, spurring European steelmakers to petition for the probe.

News of the investigation was met with little immediate concern from Turkish mills but waning European demand could propel the issue forwards. In Spain, Turkey's largest European buyer accounting for 26pc of EU deliveries last year, demand has stalled and many steel service centres (SSCs) are not expected to resume regular purchasing until 2022.

The Argus weekly 0.5mm Z100 HDG assessment has declined by nearly $100/t to $1,380/t fob since June, mostly on account of retreating European demand. HDG offers slipped further this week, down to $1,370/t fob, with offers heard to Italy at €1,220-1,250/t cfr for Z100-Z140 material, level with Indian offers.

Competition from India and Vietnam adds difficulty. Vietnamese offers have been consistently $40-60/t lower than Turkey in recent months. Well stocked EU buyers will now be more price sensitive after short delivery times kept demand for Turkish HDG buoyant earlier in the year.

Currently, re-rollers view North America and the Mena region, particularly Egypt, as prime alternative markets. Egypt's size and customer base of end-user multinational companies make it appealing as a lucrative target. Still, Turkish producers would face strong competition from Chinese mills. Shorter lead times should allow a $40-50/t premium over Chinese offers, market participants said, but sales are unlikely to match European prices. Historic export volumes are also relatively small.

In North America, Turkish exporters are more competitively positioned. A number of Turkish re-rollers have already prioritised North American sales since the second quarter, achieving $40-50/t premiums over European bookings. Much of this material will not arrive until the fourth quarter. All US imports are subject to a 25pc duty.

Turkish exports to the US were already ramping up in early 2021, totalling 14,000t by May, when the most recent data are available, compared with 6,000t in 2020. Canada too matched its 2020 total of 5,000t by May. These volumes are still negligible compared with the EU's share of sales, although deliveries are likely to spike in the second half of the year.

For now, re-rollers are not feeling under pressure as some are booked as far as 3-5 months ahead. Much will also depend on the duties recommended by the European Commission, although most are bracing for EU exports to take a hit.

By Sam Angell