Turkish steel market will continue to fall regardless of the election results - TSPA
The steel market in Turkey has stalled ahead of the elections, and most buyers refrain from restocking unless it's critical. Participants expect prices to fall further, confident that the election will not bring the stability or stimulus the economy needs.
The Turkish lira is expected to continue to fall against the US dollar, regardless of the outcome. If Recep Tayyip Erdogan remains president, his unorthodox strategy of keeping interest rates low despite high inflation is expected to drive the value of the lira further down.
Turkey's annual consumer inflation in April was 44%, up from a peak of 83% last year. But while the opposition is critical of fiscal policy, a higher interest rate is not expected to be enough to boost the value of the lira, given high central bank debt and weak confidence in the broader economy.
At an industry event this week, the secretary general Turkish Steel Producers Association (TSPA) Veysel Yayan said that of the 600,000 houses expected to be built to replace those damaged by earthquakes or deemed unsafe, 130,000 are likely to be built within 18 months, depending on how quickly work will begin after the election. The remaining 470,000 homes are likely to take another 4-5 years.
One of the factors holding up work on the houses is the lack of investment - the cost of a complete renovation is now estimated at $150 billion, up from $100 billion previously . TSPA also noted that developed countries have provided little financial assistance.
An opposition victory could further delay construction projects. The opposition criticized the construction tenders, alleging corruption and favoritism. If opposition leader Kemal Kilicdaroglu is elected, he may try to re-announce some tenders.