In the fifth week of 2009, the expected revival in the Middle East rebar market has not become a reality. Traders in the Middle East rebar market, which played the most important role in the historical rebar price uptrend seen in the first quarter of 2008, are looking back with nostalgia for the good times of 2008, and this week they have again been unable to make their expected import purchases. Turkish, CIS and European producers, who have been on the lookout for a suitable opportunity to export to this region, have been obliged to carry their hopes over into the following weeks.
Rebar prices in the Saudi Arabian domestic market, which had been on a stable trend for over two months, have this week increased by SAR 150/mt, thereby contributing to a freshening of market confidence. In the belief that rebar prices in this market had hit bottom due to the stability which had lasted for weeks, end-users have finally started to purchase rebar again due to the rising price levels. However, the ban on rebar exports in Saudi Arabia is the main problem facing local producers and is giving them serious food for thought.
Looking at the UAE, rebar prices have this week again moved on a flat trend. It has been observed that the local traders have inquired in order to purchase merchant bar and rebar. Given that there are still some rebar stocks in the local UAE market, local consumers have this week showed interest in importing Turkish rebar. The main reason for this movement is as follows: local consumers in the UAE have insisted on Turkish rebar because it is rust-free and as quantities of Turkish rebar stocks have fallen to low levels. There are still some Chinese origin rebar and some rusty and damaged rebar held in stock in the UAE, compared to only a little Turkish rebar, which has generally proved its quality in the international markets.
While there is a strong lack of balance between rebar production and rebar consumption in its local market, rebar prices in Turkey' domestic market had been either moving slightly up or else on a flat trend. However, the resistance of the Turkish rebar market prices has this week been broken in both the local and export markets. Turkish rebar producers had concluded rebar deals to Iraq and North Africa for large tonnages and at high price levels, and had concluded rebar deals to the USA and the Middle East for lower tonnages but with favorable terms (regarding both price and tonnage). They have this week entered into competition (depending mainly on changes in euro and the US dollar exchange rate) with Spanish producers in their offers to Algeria. Turkish producers had concluded rebar deals to Iraq at the price level of $520/mt ex-works Turkey in recent weeks; however, they had difficulties in concluding deals at the same price levels this week. There have also been some price declines in the local Turkish rebar market due to the price softening in the Turkish rebar export market. Traders in the local market have started to think about getting rid of their stocks slowly. In general, there have been some fluctuations in the local Turkish rebar market in recent months and the New Year in this market has not started well.
Mostly due to the strong scrap and billet prices in the international markets, it has been observed recently that rebar prices have been at relatively strong levels despite sluggish end-user demand. However, rebar prices (that have been unable to climb above $520/mt in exports due to weak end-user demand and have not been able to go above $507/mt ex-works in the domestic market) have this week been on a downtrend after the resistance of scrap and billet prices had been broken. However, it seems fairly difficult to predict the decline rate in rebar price levels for the time being.