Competition, volatile prices cap Turkish gold exports
Posted by meb at March 23rd, 2007
A brief boost in Turkey’s gold exports at the start of the year may not be sustainable as competition from China and India along with volatile gold prices curb demand for Turkish jewelry.
Gold jewelry exports from Turkey, one of the world’s biggest exporters with Italy and India, fell 22.4 percent in 2006 to the equivalent of $981 million, as wholesalers put off their purchases on high and volatile prices. Italian jewelry exports edged up 0.5 percent to 2.79 billion euros ($3.71 billion) in the first nine months of 2006. Turkish producers, who had previously predicted a better performance in 2007, are now sounding less optimistic as demand has not recovered as strongly as expected so far this year. “The first quarter of last year was very weak, that’s why this year’s first quarter looks better but actually we still do not see a strong recovery,” said Cetin Binatli, board member of Goldas. “Competition in the export markets has increased recently with India and China weighing in. India has really good marketing strategies. We can’t compete with the low cost production advantage of China.”
Turkey’s gold jewelry exports, which slipped 19.8 percent to 19.6 tons by volume in the first quarter of 2006, rose 10 percent to 13.1 tons for the first in two months. “We did not see a big jump. … The orders remain conservative as people still have difficulty predicting the price levels and do not want to take risks,” said export and import director Mehmet Yagli at Atasay, the top jewelry exporter in Turkey. “We do not expect a big recovery, but rather a steady market.”
World gold prices rose to a nine-month high of $689 an ounce at end-February, before falling back to around $660 an ounce currently. Bullion hit a 26-year peak of $730 an ounce last May. “Gold jewelry demand is still extremely sensitive to price fluctuations,” said Murat Akman, Turkey country manager of the World Gold Council (WGC). “Exports were strong in January, slowed down in February, all due to price. But I think the first quarter will be stronger than that of last year.”
Competition:
According to Binatli’s figures, India displaced Turkey as the third biggest jewelry exporter to the United States in 2006, after Italy and China. India’s gold jewelry exports reached $3.86 billion between April 2005 and March 2006, according to data from India’s Gem and Jewelry Export Promotion Council. Turkey’s gold jewelry exports were $1 billion in 2005 and slipped to $981 million last year. Akman of WGC said he expected to see some big Indian retailers at Turkey’s twice-yearly jewelry fair starting on Wednesday. “We hope we will host some senior management officials of Indian jewelry retailers, some of the big ones. We have not sold any jewelry to India so far, so this could be a good chance to enter a big market,” said Akman.
source: Reuters via Turkish Daily News
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