----Interview with Mr. Ahmet Demirel General Manager Dema Metal Co., Ltd.
Headquartered in Italy, Inox Market Service Group is a global stainless steel independent service center. They have production plants in Italy, Mexico, United States and India and the annual sales amount of stainless steel products is more than 110,000t.
Asian Metal: Good afternoon, Mr. Demirel. Thanks a lot for agreeing to the interview. Please could you briefly introduce your business scale and main products?
Demirel: Thank you very much for giving this opportunity to me and to my company. Dema Metal Co., Ltd. is a family owned company established in 1973. As a stock holder and retailer in Turkey, we are dealing with cold rolled coil, hot rolled coil, hot dipped galvanized coil and aluminized galvanized coil. We build stocks and send materials directly to end users' factories when firm orders are placed.
Asian Metal: Which domestic steel mills do you cooperate with? Where are materials sold? How about customers?
Demirel: We have built harmonious cooperation with Erdemir A.S, the oldest and largest flat steel producer in Turkey. We also order materials from other flat producers such as Gazi Metal, Yildiz Steel, Tosyali Steel and Colakoglu Steel in Turkey.
We mainly sell flat steel products to major cities of Turkey, including Istanbul, Ankara, Konya, and Kayseri. Most of our customers are end users, and some are stockiest.
Asian Metal: Do you rely much on imported materials? Where do you mainly import from?
Demirel: We used to import materials from Europe and Russia, but nowadays we buy flat steel from Turkish mills because of quality, delivery time and price. There were several new steel mills established in Turkey during past 10 years, and they provided qualified flat steel products.
Asian Metal: What's your biggest challenge at present? What about your advantages?
Demirel: Shrinking demand is the biggest challenge for us as it is for all over the world. Trade wars between countries are main reasons for the decrease in demand. Our advantage is powerful financial structure in the company. We can buy materials, stock them in warehouse and deliver them when our customers place orders.
Asian Metal: How about HRC production in Turkey this year? Do you think the situation will change in 2020?
Demirel: HRC production in Turkey was slowed down in 2019 dragged by regulations of USA and European Union towards Turkish steel products. It's well known that Turkey mainly exports HRC to EU and USA. They levy import duty for Turkish steel materials.
I expect the situation will be almost the same in 2020. The demand from EU will be strong in early 2020 and will decrease after April 2020. Therefore, I think prices may come down from the second quarter of 2020 in view of limited demand from both abroad and at home of Turkey.
Asian Metal: Prices for HRC in China rebounded sharply since mid-November boosted by the low stockpile, with the total markup of about USD30/t. I heard that prices for HRC also showed signs of increasing in Turkey. Is that true? Please could you introduce the current market situation?
Demirel: Absolutely. EXW prices of HRC increased sharply by USD80-90/t since mid- November boosted by significant price hike of steel scrap as well as the overall low stockpile in Turkey. The price for steel scrap was only USD225/t at the beginning of November 2019, but it hiked to USD300/t in late December. Finished steel prices are mostly affected by steel scrap prices. In Turkey, only Erdemir A.S produces finished steel from iron ore, while other steel mills produce finished steel from steel scrap. The list price for February production of HRC is USD495/t in Turkey, and I believe it would be USD520-525/t for March production. Nevertheless, the retailing price is only USD480-490/t because of low demand domestically.
Asian Metal: What are your thoughts for the HRC market prospect in 2020?
Demirel: As I mentioned before, price for HRC will be generally flat till April 2020, and it may go down from the second quarter if the downstream demand continues to be insufficient globally. In the meantime, considering the current prices are not too high, I do not expect sharp drops. This is just my opinion, but nobody knows. I hope we see what will happen in 2020 because politic decisions affect the world trade so much lately.
