* Colakoglu looks to use CME steel derivatives
* Inventory level low, pick up expected in September
By Silvia Antonioli
NEW YORK, June 22 The director of Turkish
steelmaker Colakoglu Metalurji expects steel production cuts and
plant shutdowns in the United States, in Turkey, Russia, Ukraine
and elsewhere as margins get squeezed by weaker demand and
oversupply, he told Reuters this week.
“This a tendency I am expecting for the next 2-3 months:
shutdowns not only in the U.S. but almost everywhere...because
there is still oversupply, that’s for sure,” Ugur Dalbeler,
managing director of Colakoglu Metalurji, said in an interview
on the sidelines of an American Metal Markets steel conference.
“That’s one of the reasons why we are having lower prices.”
Steel prices have been softening worldwide in the last few
In Turkey for example, prices for flat steel products
.HRC-TRD=SI have fallen by about 15 percent since a year ago
while long steel prices in the Black Sea area lost 10 percent of
their value in the same period RCB-BSE=SB, mainly due to
softer demand in the debt burdened euro zone and in the Middle
East and North Africa (MENA).
Dalbeler also said that Colakoglu, one of the biggest steel
firms in major producer Turkey, is looking into using steel
derivatives contracts to limit price risk arising from market
“We haven’t done anything yet because since we decided to
use them things in the market got a bit worse. The intention is
to start using them slowly but to start creating a reasonable
business in our daily operations,” he said.
He said the firm was looking mainly at the CME hot-rolled
coil contract and the scrap contract, pointing towards an
increased involvement of industrial players, expanding a
derivatives market previously dominated by financial companies.
Industrial players have in the past viewed the fledgling
market with caution, but increased volatility in steel markets
has convinced some of them to enter the market to manage risk.
BETTER AFTER RAMADAN
Steel end users are keeping their inventories very low,
below critical levels, as they are confused by the contrasting
news about the global economy, said Dalbeler, who is also the
vice chairman of the Turkish producers association and a board
member of the Turkish exporters association.
This means they will soon be forced to buy at least some
material and when a recovery takes place it could boost prices
“There is a consensus that things will get better in
September after the Ramadan and the summer holidays because due
to low inventory levels people will have to buy starting from
August,” Dalbeler said.
He added that Russian and Ukrainian steelmakers were selling
very aggressively into Turkey lately both flat and long steel
Erdemir (EREGL.IS), Turkey's largest flat steel maker, said
on Wednesday firms from the CIS were having difficulties in
other markets and selling at cheaper prices in Turkey, whose
market is stronger than Europe which is struggling with an
economic crisis. [ID:nL5E8HLC0H]
Turkish consumption of hot-rolled coil, a steel flat product
mainly used for white goods production, was 13 million tonnes
last year while domestic production at 9 million, with the
difference being filled by imports mainly from Russia and
As Turkish steelmakers continue to invest in expanding
their flat product output, though, Turkish production is likely
to catch up with demand by 2014-2015, according to the
(Editing by Keiron Henderson)
Keywords: STEEL SUCCES/COLAKOGLU
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