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MarketScreener Homepage  >  Equities  >  ISTANBUL STOCK EXCHANGE  >  Eregli Demir ve Celik Fabrikalari T.A.S.    EREGL   TRAEREGL91G3

EREGLI DEMIR VE CELIK FABRIKALARI T.A.S.

(EREGL)
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EU takes aim at Turkish steel sector already buckling under Trump tariffs

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01/17/2019 | 10:55am EDT
FILE PHOTO: Steel rolls at the plant of German company Salzgitter AG

LONDON/ANKARA (Reuters) - The European Commission's move to extend its steel import restrictions threatens to force Turkish mills, already buckling under the weight of U.S. tariffs, to cut production further or in some cases close down, sources said.

The Commission said on Wednesday it will extend and beef up its existing "safeguard" steel import caps until July 2021 to counter concerns that European Union markets are being flooded with steel no longer being exported to the United States.

For Turkey's vast steel sector, the fourth largest contributor to the country's economy, the caps could prove particularly painful as the EU has given it additional "country-specific" quotas.

Under the safeguards, Turkey has a tariff-free quota for rebar, a construction steel that makes up most of its steel exports, of around 300,000 tonnes for the first nine months of the respective quota periods, down 60 percent from its 2018 exports.

Country-specific restrictions do not apply in the last three months of the quota periods and Turkey could make up some sales then, but its annual export levels will still be sharply lower.

"Our export markets have disappeared, the local market hardly exists, we've got lots of capacity and no market," said a London-based Turkish steel trader.

He added that hopes the United States would soon cut its 50 percent tariff on Turkish steel imports were also fading given it is demanding that in return, Ankara hold fire on Kurdish forces in Syria, something Turkish President Tayyip Erdogan cannot do ahead of local elections.

Major Turkish mills such as Cebitas and Ekinciler said they had, before the EU announcement, already slashed output while Koc Metalurji said it had stopped output for about a month.

Erdemir, Turkey's largest producer, said it was producing as normal.

Jefferies estimates EU caps on rebar from all countries combined should reduce its total rebar imports by at least 28 percent a year, adding producers such as ArcelorMittal and CMC should benefit most from EU caps on long products like rebar.

"(EU) quotas for (Turkish) rebar are extremely low and will be exceeded in the first one or two months. Local demand is also extremely poor," said Turkish Steel Exporters' Association (CIB) head Adnan Aslan.

The CIB estimated late last year, before the latest EU move, that Turkey's steel production, consumption and exports would fall 30 percent this year.

Wednesday's beefed up EU safeguards come after the United States early last year placed tariffs of 25 percent on imported steel, while singling out Turkey later in the year with tariffs of 50 percent due to political tensions with Ankara.

The United States had been Turkey's largest steel export destination in 2017, but the country's steel flows to the EU ballooned 80 percent last year, according to Jefferies, making the EU Turkey's the largest steel export destination.

"Traditional export destinations (for Turkish mills) are closing one after the other. Most probably, the (EU) quotas will be filled immediately, so EU producers will have a relatively good year," the International Rebar Producers and Exports Association said in a note.

(Reporting by Maytaal Angel and Ceyda Caglayan; editing by Pratima Desai and David Evans)

By Maytaal Angel and Ceyda Caglayan

Stocks mentioned in the article
ChangeLast1st jan.
ARCELORMITTAL 2.70% 12.102 Delayed Quote.-35.07%
COMMERCIAL METALS COMPANY 2.95% 15.73 Delayed Quote.-1.81%
EREGLI DEMIR VE CELIK FABRIKALARI T.A.S. End-of-day quote.
SALZGITTER AG 3.30% 15.81 Delayed Quote.-40.83%
VOESTALPINE AG -1.64% 19.24 End-of-day quote.-26.54%
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Financials (TRY)
Sales 2019 28 680 M
EBIT 2019 5 115 M
Net income 2019 4 283 M
Finance 2019 2 949 M
Yield 2019 14,4%
P/E ratio 2019 5,10x
P/E ratio 2020 4,43x
EV / Sales2019 0,66x
EV / Sales2020 0,66x
Capitalization 21 735 M
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Mean consensus OUTPERFORM
Number of Analysts 13
Average target price 10,03  TRY
Last Close Price 6,21  TRY
Spread / Highest target 101%
Spread / Average Target 61,6%
Spread / Lowest Target 20,8%
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NameTitle
Sedat Orhan General Manager
Ömer Muzaffer Baktir Chairman & Managing Director
Esat Günday Executive Vice President-Operations
Sami Nezih Tunalitosunoglu Chief Financial Officer & Executive Vice President
Eric Vitse Chief Technology Officer
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1st jan.Capitalization (M$)
EREGLI DEMIR VE CELIK FABRIKALARI T.A.S.3 993
NUCOR-5.89%14 464
POSCO--.--%13 601
ARCELORMITTAL-35.07%12 857
NOVOLIPETSK STEEL PAO--.--%12 658
NOVOLIPETSK STEEL PAO-8.92%12 658