Prices in the local Turkish merchant bar market, which had been going up in inverse proportion to demand, have been going through a somewhat calm phase as of the last week of January. Steady raw material and semis prices constitute the main factors responsible for this situation. In addition, Turkish domestic traders, fearing a downward trend in long products due to the fact that prices have already reached a fairly high level, are abstaining from purchases. Market players, also sharing the view that market prices are unstable, are restricting themselves to watching the ambiguous scrap-related increases or flat-trendings in billet prices, and waiting to see future developments instead of buying.
In the local Turkish merchant bar market, the US dollar, which has been gaining ground against the Turkish lira (TRY) as of the early days of the week, has caused merchant bar prices on TRY basis to increase strongly compared to last week. However, the increase in question has failed to excite the market players since they know that it is directly linked to the exchange rate. Market players, who are not sure about when demand will go up, are pointing to factors such as slowness in construction or heavy weather conditions as important reasons behind the slackness in demand. It is not known if the slowness in construction will end in the short term; however, market is being hindered by the heavy weather conditions seen across the country. Merchant bar prices this week depending on size, thickness and regions have been at the following levels: angles at TRY 965-990/mt, flat bars at TRY 970-1,010/mt, square bars at TRY 960-1,000/mt, small size NPI-NPU at TRY 960-980/mt and 100-120 mm IPE at TRY 1,000-1,010/mt - all prices are ex-works, excluding VAT. The prices may differ depending on the fluctuations in the TRY and other currency rates, and also on the sales price levels of traders (who had previously taken position) which are lower than the mills' levels.
In the Turkish merchant bar export market, while there is no great change in offer prices this week compared to last week, prices are still at high levels in export offers to Europe. Following the depreciation of the euro against the US dollar from 1.48 to 1.45, the prices in question, already at higher levels for Europe, have increased even further. Prices in the Turkish export market may differ depending on whether the cost of transportation to the chosen domestic port will be reflected in the price by producers in the different regions in Turkey, or on whether the producers will use their own port. Turkish rolling mills are offering angles for export at $810-830/mt FOB on actual weight basis for April shipments. In addition, flat bars and squares are being offered at $820-840/mt FOB while NPI-NPU are being offered at $820-840/mt FOB, 80-100-120 mm IPE is at $875-890/mt FOB, and 80-100-120 mm IPE AA at $885-900/mt FOB, all on actual weight basis and also for April shipments.
Looking at the European domestic markets, it seems that the prices of merchant bar profiles are increasing in Italy. In the second week of January, the price level of IPE of sizes up to 140 mm was at €560/mt ($819/mt) ex-works, while sizes up to 200 mm were at the level of €610/mt ($892/mt) ex-works. However, this week, the price of IPE of sizes up to 140 mm is at the level of €650/mt ($945/mt), while the 160-200 mm IPE is at the level of €670/mt ($970/mt) ex-works. Besides the extra costs added to merchant bar prices at the very beginning of 2008, more recent production cost increases, caused by higher scrap and pig iron prices, have being causing some trouble for producers. SteelOrbis has been informed that the abovementioned production cost increases caused by scrap and pig iron are to be reflected on to small and large size merchant bar prices within a short time. Furthermore, the fact that European producers' stock levels are almost at zero and that they are continuously receiving orders increases the likelihood of the above prediction coming true.