Expert predicts shut downs because of oversupply, leading to lower prices
Colakoglu Metalurji, a Turkish steelmaker, expects that as margins get squeezed by weaker demand and oversupply, there will be steel production cuts and plant shutdowns in the United States, Turkey, Russia, and the Ukraine, among others.
Managing director of the Turkish company, Ugur Dalbeler, said: “This is a tendency I am expecting for the next 2-3 months: shutdowns not only in the US but almost everywhere…because there is still oversupply. That’s one of the reasons why we are having lower prices.”
In the last few months steel prices have witnessed a decline worldwide. In Turkey for instance, prices for flat steel products have fallen by about 15%, while long steel prices in the Black Sea area lost 10% of their value. This is mainly caused by softer demand in the Middle East and North Africa.
Steel end users are keeping their inventories below critical levels as they are confused by the contrasting news about the global economy, said Dalbeler. According to the company’s managing director, this means that these users will soon be forced to buy at least some material, and when a recovery takes place, it could boost prices quickly.
“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 predicted.