Business news from Ukraine

Inflation in Turkey reached 59%

Inflation in Turkey accelerated for the second consecutive month in August and reached an eight-month high due to tax hikes, a weaker lira and rising food prices.

Consumer prices increased by 58.9% year-on-year, compared to a 47.8% rise in July, according to the country’s statistical institute (Turkstat).

Analysts surveyed by Trading Economics had predicted a more moderate acceleration of inflation, to 55.9%.

Food prices jumped 72.9%, the highest rise in eight months. In July, they rose by 60.7%.

Utilities went up by 25% last month (19.3% in July), transportation by 70.2% (43.4%), and medical services by 77.6% (75.9%). The growth in the cost of furniture and household appliances accelerated to 58.9% from 50.1%.

Core inflation, which excludes the cost of food, energy, tobacco products and gold, was 64.9% in August, compared to 56.1% a month earlier, Turkstat reports.

Meanwhile, monthly consumer price growth slowed to 9.1% in August from 9.5% in July. The July figure was the highest since December 2021.

The Central Bank of Turkey expects inflation to be 58% in 2023, 33% in 2024, and 15% in 2025.

The Turkish national currency is trading at around 26.77 lira per $1 on Monday, compared to 26.73 lira at the close of the previous session. The Turkish stock index BIST 100 has risen by 1% since the market opened.

Earlier, the Club of Experts project analyzed the state of the Turkish economy before the elections, see more here

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Due to blockage of sea ports, Ferrexpo was able to supply pellets only to Europe and Turkey

Mining company Ferrexpo with assets in Ukraine in January-June this year due to the blockage of sea ports by Russia was able to supply pellets only to European countries and Turkey.

According to the semi-annual report of the company on Wednesday, Ferrexpo in the first half of the year-2023 all 100% of the realized products supplied to Europe, including Turkey, while in January-June-2022 this share was 92%, in the first half of the year-2022 – 79%.

Earlier it was noted that in H1-2022 the company increased the share of sales to Europe, including Turkey to 79% (in IH-2021 – 60%), Northeast Asia – to 5% (8%). Deliveries to the Middle East and North Africa were absent at that period (2%), as well as to North America (2%). Meanwhile, sales to Southeast Asia (SEA), including China, fell to 16% from 29%.

According to the report, the group was mainly limited to exports to Europe either by rail or inland waterways via the Danube River in the current year. It produced 1.967 million tons of pellets, operating one to two of four pelletizing lines, each capable of producing about 3 to 3.5 million tons of pellets per year, depending on the product types produced.

As at the end of July, the group operates one pelletizing line to reduce existing product inventories.

C1 production cost in H1-2023 was $71/tonne, down from H1-2022 ($85/tonne) due to the hryvnia devaluation in H2-2022 and lower prices for some consumables and the positive effect of energy savings. At the same time, iron ore prices in H1-2023 on the global market decreased by 5%, the outlook for the third quarter is slightly worse due to weak demand in Asia and increased iron ore supplies from Brazil and Australia.

Total selling and distribution costs in H1 2023 were $74 million (H1-22 – $147 million), mainly due to lower shipping volumes in the period due to the closure of Ukraine’s Black Sea ports in February 2022 and higher alternative freight costs that followed access to European customers. C3 freight rates declined 26% year-on-year to average $20/tonne in 1H 2023 as a result of lower global energy prices and lack of demand from Brazilian miners.

It is also stated that previously the group’s maritime logistics routes represented the cheapest and most efficient way to deliver products to customers. However, due to the Russian invasion of Ukraine, the group has had to adapt and establish new logistics corridors and relationships with logistics service providers and port operators. These routes rely heavily on rail, where capacity is limited and demand is high, including from businesses and industries, and transportation by barge is also limited and costly.

“The Group continues to explore its logistics options and has made progress in reducing transportation time and improving efficiency where possible,” the report said.

It also reminds that rail tariffs in July-2022 increased by 70% for 20 types of cargo, even when the group uses its own railcars.

During the first six months of 2023, the average monthly iron ore price remained in the range of $100 – $200/tonne, royalties for iron ore mining are charged to the group at a rate of 5% in this period.

Ferrexpo is an iron ore company with assets in Ukraine.

Ferrexpo owns 100% of Poltava GOK PJSC, 100% of Yeristovskiy GOK LLC and 99.9% of Belanovskiy GOK LLC.

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Turkey supports NATO expansion

Turkey, as the NATO summit in Vilnius showed, will continue to be a strong partner of the alliance in addressing common security challenges, including the geographical expansion of the bloc, said Fahrettin Altun, head of the Turkish presidential administration’s communications department.

“Turkey is actively engaged in confronting emerging challenges by supporting NATO’s strategic orientation. In the future, Turkey will continue to be a staunch ally and a crucial partner in the alliance’s new initiatives,” he wrote in an article for Middle East Eye magazine.

He added: “Turkey believes that the expansion of the alliance is the key to lasting peace and stability in the world.”

The official clarified, however, that Turkey supports NATO’s geographical expansion “not against a specific country, but to turn the alliance into a comprehensive security organization that will help achieve stability.”

Alutn said that Turkey, which controls the geographic land bridge between East and West and the waterways to the Black Sea, “it is crucial to be in the Western camp.”

“Turkey’s long and deep commitment to NATO has protected Europe. Its continued engagement is vital to the security of the continent,” he wrote.

The official assured that “Ankara will continue to be NATO’s partner in addressing the alliance’s common challenges,” adding that this will be done “in accordance with its national security requirements.”

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In May Turkey was selling gold and was bought by Poland and China

The world’s central banks, according to preliminary data, sold 27.4 tons of gold from international reserves in May 2023, the World Gold Council (WGC) estimated.
By comparison, sales totaled 69.4 tons in April, according to revised figures.
The largest state seller of gold in May was Turkey (62.8 tons). There were also reduced reserves in Uzbekistan (10.9 tons), Kazakhstan (2.4 tons) and Germany (1.8 tons).
They bought gold in reserves in Poland (19.9 tons), China (15.9 tons), Singapore (3.9 tons), Russia (3.1 tons), Iraq (2.3 tons), India (1.9 tons), the Czech Republic (1.8 tons) and Kyrgyzstan (1.5 tons).

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Turkey and Egypt raised level of diplomatic relations and appointed ambassadors for first time in 10 years

Turkey and Egypt have upgraded their diplomatic relations to ambassadorial level, appointing them for the first time in 10 years, the Turkish Foreign Ministry said Tuesday.
“Turkey and Egypt announce that diplomatic relations between the countries have been upgraded to ambassadorial level,” the media cited excerpts from a Foreign Ministry press release.
Salih Mutlu Shen, the country’s former representative to the Organization of Islamic Cooperation, was appointed the new Turkish ambassador to Egypt. The Egyptian side offered to appoint Amr Elhamami as ambassador to Ankara.
“The move is aimed at normalization between the two countries and reflects the mutual desire to develop bilateral relations in accordance with the interests of the peoples of Turkey and Egypt,” the document stressed.
Arab media recall that Turkish and Egyptian presidents Recep Tayyip Erdoğan and Abdel Fattah al-Sisi agreed to exchange ambassadors in late May. At that time, the office of the Egyptian leader said that in a telephone conversation the two presidents agreed to strengthen relations and cooperation between the two sides and therefore decided to raise the level of relations to ambassadors.
Relations between Ankara and Cairo deteriorated after the military coup in Egypt in July 2013. At that time, Turkey and Egypt recalled their ambassadors. In November 2013, Cairo declared the Turkish ambassador “persona non grata.

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Erdogan sworn in before parliamentarians

Turkish President Recep Tayyip Erdogan’s swearing-in ceremony was held Saturday at the Turkish parliament.

“The swearing-in ceremony and inauguration of Turkish President Recep Tayyip Erdogan took place Saturday, June 3, at the Turkish parliament building in Ankara,” Anadolu Agency reported.

The ceremony was attended by representatives from 78 countries, including the heads of state and government of 20 countries.

Erdoğan, 69, was elected to a third presidential term – until 2028.

Later, Erdoğan will lay a wreath at the mausoleum of Mustafa Kemal Atatürk, the founder and first president of the Republic of Turkey. A luncheon in honor of the guests who arrived for the event is also planned.

On Saturday, Erdogan will also name a new Turkish cabinet.

Erdogan won the second round of the Turkish presidential election, which was held on May 28. According to data after processing 99.75% of ballots, Erdogan received 52.1% of the votes, while his opponent, opposition leader Kemal Kılıçdaroğlu, won 47.9%.

Earlier, a video on the Club of Experts channel analyzed the situation in Turkey after the elections. The full video can be seen at the link:

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