Demand in the local Turkish billet market is still characterized by weakness, while locally produced billet prices have softened by $20/mt week on week to $330-335/mt ex-works. Ahead of the end-of Ramadan holiday (July 4-7), the volume of price inquiries for locally produced billet is at very low levels, while Turkish finished steel producers' billet purchases are sluggish. Meanwhile, Turkish rebar buyers are still concluding purchases only in line with their needs. Market players in Turkey are also keeping a close eye on China's State Administration of Taxation's special audits on tax refunds received by steel producers in Tangshan for exports of square bars.
Chinese suppliers had long been exporting square bars in place of billets, as they could then avail of a tax refund instead of being subject to 20 percent tax. This caused uneasiness in the global market. At the end of last week, the accounting records of 11 major steel mills in Tangshan were seized by the Chinese taxation authorities, which will affect cargos due to be shipped by these mills by the end of this month. Due to the abovementioned measure in China, in the coming period the volume of Chinese billet supply to the global market is expected to fall, while costs in the global market are expected to rise, which could also trigger upward movement in global scrap and billet prices.
Additionally, import billet offers to Turkey have remained unchanged over the past week. Ex-CIS billet offers to Turkey are still at $320-330/mt CFR, while Chinese billet offers to the same destination have moved sideways at $305-315/mt CFR week on week. Moreover, suppliers in both China and the CIS region are eager to conclude billet sales to Turkey and so they are inclined to accept Turkish steel mills' requests for discounts.