Diva Metal’den Uluslararası Paslanmaz Çelik Etkinliğine Katılım

Mr. Sinan CETIN
ISTS / İstanbul 2014
2 Sep 2014
Day I, Session II, Distribution, Stratégie for SS Products

Dear Guests,
Welcomed to our presentation.
My name is Sinan CETIN and I am one of the partners and the manager of Diva Metal Stainless Steel Service Center in Gebze, Turkey. At this location we also manufacture tig welded stainless steel pipes and in Moscow Russia we have a stainless steel sales office and warehouse.

In the following minutes I would like to talk about the distribution Strategies of stainless steel in the context of Turkey’s geographical position in the world and mainly in our region.

During my presentation I would like to avoid statistical information, because everyone can reach this information easily via the internet and other resources.  Instead during my speech I will try to cover three main topics and make it more lively.

• Firstly, the overall view of stainless market  in the our region,

• Secondly, Turkey’s geographical position in stainless world, focusing on our region

• Thirdly, focusing on consumer priorities and ordering habits in the region and Turkey

Firstly, I would like to mention how happy we are, and probably many of the participants share our view, regarding the increasing production of stainless steel in latest years. As we all well know that the last year, in 2013,  the stainless steel melt shop production increased by 7.8% to 38.1 million metric tons. With the exception of Western Europe and Africa, all regions achieved positive growth.
Moreover, good news continues and latest figures released for first quarters of this year stainless production continued to increase around 7 percent and probably end of the year we will probably see the figures above 40 million metric tons.
As a business man, it is nice to have know that increasing production and the entering of new producers to stainless steel world  from different countries  will ease the pressure in the  stainless market which has mainly suffered in the past  from lack of material due to lack of producer, monopolies and expensive prices. Now prices will be always under pressure and producers must concentrate on the distribution strategies of stainless steel very  carefully.
If we focus on our region, Turkey will be hot spot at the center of the region for distributing stainless steel mainly because of following facts.

a)  Political stability and security,
b)  Good established local and foreign financial institutions, banks, Eximbanks, etc,
c)  Good transport facilities especially sea and road transport,
d)  Historical and religious relationships with other countries in the region making our bonds stronger
e)  A young and well educated population,
f)  Excellent geographical  position in the region, as a bridge between Asia and Europe,
We should underline that our region is mainly consists of developing countries. Needless to say  these developing countries will require more stainless day by day. Especially when you think most of these countries in this region, are rich in natural resources in particularly gas and petrol.  By any chance,  if you go to the main cities in these countries you will be very surprised to see the amount of different kinds of  stainless steel applications used. 
It is clear that the countries in this region will continue to increase their demand in terms of both  volume and grades. The question is where they will get it from, who is going to supply them?  In this region I think Turkey is the biggest candidate to be a good supplier.
In this context I would also like to draw your attention to how consumers demand has changed in terms of the grades they require.
For instance, 10 years ago there was hardly demand for different ferritic 400 series or 200 series or duplex series in Turkey or in our region.
In the past, clients were happy to get 430 or 304 or 316 series stainless steel. These days, each day  we make offers in different 10 -12 alloys to various customers in different countries.  However, to meet all this demand requires big stock and big money and big risk, especially when you consider, 90 % of the countries around us and in our region suffer from instability, politically and in terms of security and also high financial risks.  Turkey stands as a safe port to serve to this region. 
Having said all that, in the last ten years things have changed drastically. Nowadays, The clients,  not only from Turkey but also other countries like Russia, Egypt or any middle east country have started to ask special  grade stainless and alloys. As a consequence of that suppliers who serve the region have to arrange not only adequate amounts of stainless in their stock but also have to keep various grades of stainless in order to respond to clients demand in both volume and special grades.
Consequently, the world is changing, the market is also changing, and we must change too. Quick decision making and fast response are the key words in this business.  To make a comparison, we need the maneuvering capability of a small fast craft and not the huge slow petrol tanker.
We need  high speed and high maneuverability for the success in our area.
At this point I would like draw your attention the changing consumer needs in this region. In our region consumers wants the material to be delivered fast, they cannot make long term planning, the demand for them is also not stable and they don’t want to leave themselves in an open position for risks, such as local market risk, currency risks, etc. They just want to order, get it as fast as possible,  produce their end product and deliver. They also require fast transport because of the lack of finance and capital which is one of the biggest problems in the region.  Even in Turkey, today bank interest rate for Turkish lira are approximately 11–12 % per annum, and other countries are much more higher. Simply, end users in our region  don’t want to finance stainless in containers coming from faraway ports with 35 – 45 days transit times. So Turkey is again in a very good position to be a regular supplier. 
At this point I would like to draw your attention to Turkey’s unique geographical position in the world. Turkey is located between The Middle East, Asia, Africa and Europe.  Turkey plays a very important role in the distribution of stainless coming from the main supplier to the main consumers.
Just to give you more of an idea,
From Turkey  to  Russia Novorossiysk, Ukraine and Moldavia,  2- 3 days  by sea
From Turkey to  Egypt, 3 days by sea
From Turkey to  Iran, Syria and Iraq, by truck 24 to 48 hours
From Turkey to Azerbaijan, by truck 4 -5 days
From Turkey to Kazakhstan, Uzbekistan, Turkmenistan,   7 – 10 days by truck
From most of the European mills, Turkey can be reached in one week by sea passage.
From most of the mills in the Far East, using Turkey’s position is the easiest and shortest way to reach Asia, The Middle East and European markets.
Another big problem of distribution in our region, is that there are many small end users spread over a vast area and it is hard to service to them all.  This demand requires quick and adequate response. In other words, suppliers have to challenge this problem by having a very good logistical organization  and an excellent distribution chain  covering a large area in  very difficult geographical conditions.
Most of end users demand now not only standard sizes but material processed to meet their exact sizes and requirements, which makes more demand for stainless steel service centers in our region. In Turkey in the last 3 years the number of stainless steel service centers has tripled and Turkey is getting ready to have the key role of being the distribution center of stainless steel in our region.  
Another big advantage we have now, thanks to POSCO AST investment, as a service center being only 30 minutes away from a good and large producer such as Posco will definitely help us to be key supplier of stainless steel in our region.   This will help us a lot on finance as we won’t have to finance the material while at sea.  Instead we can share this finance advantage with our end users in different regions and countries.
Finally, I would like to draw your attention to the scope of stainless steel applications in the region.
This scope gives us a rough idea about consumptions in terms of variety and volume.
We would like share our company knowledge on consumption of the stainless in the region.
First of all, the prevention of water and air has become one of the most challenging environmental issues in the region countries. The healthy living environment is becoming a primary concern in the region. As a consequence of that using stainless for environmental purposes will increase in the region.

That means consuming stainless for
•  Desalination plants,
•  Water storage and distribution tanks and pipes,
• Water treatment plants,
•  Air ducts and ventilation units
will be on the agenda in the region.
Moreover, once regarded as a very expensive material for everyday articles in the home and office, stainless steel has emerged in recent years as highly desirable and affordable.  While increasing annual income and the level of development in the region countries, naturally, the amount of stainless usage at home and in offices will increase in the countries like Turkey, Russia and Egypt.
In the latest years, Turkey has become the center of the automotive industry in the region. At the moment, 15 international companies with more than 18 production factories operate in Turkey. They also  use wide range stainless.
In addition to these;
• Solar energy applications,
• Chemical and petrochemical  industry requirements,
• Food and beverage industry applications,
• And architectural and construction companies
will be the leading stainless steel consumers in the region.
Dear Guest,
While ending my presentation, I would like to thank you for your kind attention and I am ready to answer your questions if you have any..
Thank you.