The collapse of the lira forces Turkey's steel mills to go into hibernation

The sharp devaluation of the lira against the US dollar is already putting strong pressure on the Turkish long products market. Since mid-December 2013, the national currency has lost about 1,296 units, of which 696 in the past week alone.

In this situation, the demand from trading companies and end users has almost disappeared. Most steel mills in Turkey have suspended sales pending the stabilization of the lira. Even though domestic prices for rolled metal products in lira are rising, the price levels in US dollars remain unchanged in the domestic market.

The Turkish government has taken drastic measures in lending up to 12 percent compared to 7.75 percent in an attempt to stop the fall of the Turkish lira, which has recently declined significantly, losing against the dollar, and touched the level of 1 USD = 2.33 TRY at the end of January.

In addition, the weakness of the Turkish currency against the US dollar had a negative impact on the purchasing activity of steel scrap. This is because Turkish factories buy scrap on the international market in US dollars, and accept payments from domestic sales in lira. Turkish manufacturers are also suffering from more sluggish demand at home and abroad for their finished products. Therefore, some of them decided to either cut production or look for scrap cheaper from smaller supplier countries.