Turkish merchant bar prices increasing, how will Europe and Middle East markets respond?

As we begin the new year, the Turkish domestic merchant bar prices are on an increasing trend, while the export market for merchant bar is characterized by calm. We mentioned in our previous analyses that the Turkish merchant bar producers have been focusing their sales towards the Middle East and the surrounding region in general. The high Chinese prices caused by the Chinese export tax have also allowed the Turkish producers to increase their sales to the Middle East. The Chinese export tax on merchant bar has remained unchanged at 10 percent, effective as of January 1. This situation is expected to reflect positively on the Turkish producers' sales to the Middle East in the coming period.
 
The Turkish producers have set their angles export prices on actual weight basis at $750-770/mt FOB and their flat bar export prices at $760-780/mt FOB. The offers have started to be given for late February/early March shipments.
 
Demand for merchant bar in Europe has been experiencing a lack of activity since September 2007. The Christmas-New Year holiday is the main reason for the calm mood which has been in evidence for the past two weeks. It is expected that the European market will gain momentum and that the overall European domestic markets will increase their prices as of the second week of the new year.
 
However, the new year brought uncertainty to the Turkish domestic merchant bar market. The ongoing rising trends in both scrap and billet prices have contributed to the increase in merchant bar prices.  It can be said that some producers have been experiencing difficulties in issuing price lists due to stock counting activities and the uncertainty in the market. Depending on the sizes and regions, the prices in the Turkish domestic merchant bar market are as follows: $720-790/mt for flat bars, $705-770/mt for angles, $720-780 for NPI-NPU and $720-780/mt for squares. The prices in question have shown constant fluctuations on a TRY basis due to the movements in the US$/TRY exchange rate, while they have been stable on a US$ basis. 
 
The upward movement seen in scrap prices, as well as the tightening in the overall billet market after the increase in the Chinese export tax, have been causing an expected rise in billet prices; these factors may be seen as indications of a possible further price increase in the coming period. The revival in the European market and the ongoing purchases of the Middle Eastern countries may boost price stability.