Turkey rebar: Weak export and domestic demand persists

Turkish mills attempted to implement another domestic rebar price increase this morning in response to the increasing scrap import price, despite the lira strengthening against the US dollar since yesterday morning. The increased offers were met by extremely weak demand.

Mills are now attempting to implement strategies in overseas markets to reinvigorate demand for Turkish semi-finished and finished product.

The Argus daily fob Turkey steel rebar assessment was unchanged at $497.10/t fob Turkey on actual weight basis today.

No overseas region showed any considerable demand for rebar this week. Southeast Asian winter re-stocking may occur at some point but mills cannot ascertain to what extent this may take place. Mills do not now expect any improvement in Turkish domestic demand for the rest of the year, while buyers in Europe and the Middle East are expected to maintain their conservative approach towards purchasing. Some small tonnage business is still expected to be concluded with northwest European importers next week.

This makes southeast Asia the only possible destination where Turkish mills can sell large tonnages and possibly upwardly lift their rebar prices. But the supply from other global regions may be sufficient for southeast Asian importers to prevent any upward price movement, so Turkish mills appear to be taking other strategies to attract demand from that region.

One strategy is to test Southeast Asian demand for Turkish billet. If scrap moves above $335/t cfr Turkey next week, which is a strong likelihood, CIS billet export offers are likely to increase from the $460-470/t fob mark observed this week. Turkish buyers are highly unlikely to purchase higher than this level but traders have received strong indications that Egyptian buyers will be heavily active next week.

Some Turkish mills have held back billet availability from the export markets as a result. These mills expect that GCC and CIS billet exporters cannot meet anywhere near the overall demand from south-east Asia. More CIS and GCC billet deals were confirmed with southeast Asian importers this week but Turkish mills expect the supply to dry up from these regions.

A rise in freight rates in the Black Sea market is also starting to curb southeast Asian demand for CIS billet. Turkish steelmakers aim to then fill the gap in southeast Asian demand for billet at new higher prices and increase their scrap-billet margin. Any billet increase could then subsequently lend support to rebar prices.

In the domestic market, a Marmara mill was confirmed to maintain offers at TL3,410/t and TL3,450/t ex-works in the Biga and Istanbul regions, respectively. These prices come to the equivalent of $512.20/t and $518.30/t ex-works excluding VAT. Both levels are up around $6/t from yesterday's offers.