The poor demand in Turkey's domestic and foreign long steel markets caused sharp price drops last week. The delay of the long-awaited revival both in Turkey's domestic and export markets is seen as the main reason behind this sharp price drop. Having started the current year with positive expectations, the winter season, which was longer and harsher than usual, impacted Turkish domestic long steel demand and prices. At present, the demand revival expected in Turkey in line with new construction projects has not materialized so far.
In the first quarter of this year, the weather conditions, the demand situation and the export sales performance were the main reasons behind the price fluctuations observed in the Turkish domestic long steel market. In this period, slight price increases managed to gain acceptance, while sudden price increases were faced with resistance from buyers. Thus, price changes were mostly gradual in the first quarter of the year. In the past months, Turkish steel producers occasionally kept their ex-works rebar prices below spot rebar prices and this price policy was seen as a strategic move before these mills' scrap bookings. Following last week's drops seen in long steel prices, it first appeared that Turkish mills may have been preparing the market for their next scrap bookings. However, the latest price decline seems like the unavoidable result of poor market conditions.
The delay of the expected revival in the Turkish domestic market as well as the still slack demand in foreign markets have caused a worsening of the market conditions. Besides, Turkish mills are under increasing pressure to conclude sales, arising from the risk of slower demand in their export markets approaching the summer months - due to Ramadan in the Middle East (begins in mid-July) and the August summer holidays in Europe. Thus, demand is expected to slow down in July and remain sluggish until September, while the current pressure to conclude sales is being reflected in downward pressure on prices. In addition, it may be considered that Turkish long steel mills are trying to remain competitive by lowering their prices in the market, where supplies have increased lately due to these producers' new investments and their eagerness to operate at full capacity. However, any positive development in the domestic or foreign markets may quickly reverse the market trend and the downward price movement may thus come to an end.
Turkish rebar suppliers' export offers, which have approached buyers' price expectations, may result in new transactions in the coming days. In addition, last week's rebar transactions from Turkey to Dubai which amounted to a total of 40,000 mt at $670-675/mt CFR on theoretical weight basis, have caused some buyers to think that prices may have hit bottom already, and this view may support the conclusion of new transactions. Besides, in Egypt also, Turkish rebar offers have approached the price levels expected by buyers. Consequently, Turkish rebar export offers currently at $650-660/mt FOB on actual weight basis may attract more demand soon.