Winter sun in Mediterranean and Middle East rebar markets

The rebar markets, which were strong in late 2006, have continued the same trend at the start of 2007, especially in the Middle East where the market is even stronger than expected. The Turkish local market has seen an increase this week. The strengthening of the US Dollar/Euro exchange rate, and the rise in import scrap prices and export prices for rebars, have all helped trigger the rise in the local market. The local rebar prices in the Turkish market have been varying in a range of TRY 890-945/mt (approx. $524-556/mt, excluding VAT). The increases in export prices have been sharper. There were offers given by Turkish mills for export at $515-520/mt FOB Turkish ports on actual weight basis to destinations other than the US and Gulf markets. However, these offers have increased towards the end of the week. Currently, Turkish mills are offering rebars for export at $520/mt FOB and above levels. The offers given for the Gulf region, which were at $520-525/mt CFR on theoretical weight basis early this week, have increased to a range of $540-545/mt CFR on theoretical weight basis. Some mills say that these levels have been accepted by certain buyers in the UAE market. The increase in import rebar prices has caused the prices of imported rebars held by UAE stockists to increase to a level of AED 2,030-2,050/mt ($552-558/mt) on theoretical weight basis for three-, four- and five-month deferred payment. This situation may cause the local mills to increase their prices. Apart from the UAE market, the buyers in Israel are heard to have accepted the price level of $525/mt FOB Iskenderun. Egyptian mills have been offering rebars for export at $515-520/mt FOB Egyptian ports early this week. There haven't been any sharp increases in the export offers given by Egyptian mills since December. During November, while the prices in the Mediterranean region indicated declines in general, Egyptian producers kept their prices at levels not lower than $500/mt FOB. The Egyptian rebar market seems to have not given any excess reaction to the increases in the Mediterranean and the Middle Eastern markets. The local prices in Egypt have retained their levels of December, most recently standing at around EGP 3,000/mt ($525-526/mt) ex-factory level. However, the increase in the scrap prices and the continuous rise in the prices of the Egyptian mills' rivals may cause both local and export prices in the Egyptian market to increase in a very short time. Turning to southern Europe, the market expectations are positive. However, there has so far been no actual increase in this region. The Spanish mills alone hiked their prices by Euro 20/mt in December; yet they were only able to start applying this increase in January. Currently, the base price in the Spanish market is at Euro 310/mt. AENOR-certificated 12 mm rebar in the local Spanish market is at around Euro 483-490/mt delivered to customer basis. The producers have announced that they may further hike their prices by Euro 20/mt during January. The price movements in the Portuguese market are slower than in the Spanish market. Rebar prices in the local Portuguese market are at Euro 415-420/mt delivered to customer basis. Stockists in the Iberian peninsula mainly prefer to replenish their stocks with the goods of local mills. However, the rise in import rebar prices may cause the mills in the Iberian peninsula to hike their prices rapidly. After a calm period during December, Italian mills have tried to start January with price hikes. Producers have insisted on Euro 430-440/mt ex-works. In reality, however, actual sales could only be concluded at Euro 425-430/mt ex-works. Taking into account the fact that the market players have not shaken off the holiday mood yet, the mills may hike their prices as much as they want in the coming weeks. Since the Ukrainian mills have hiked their prices by around $20/mt to $470/mt FOB level for the North African market, the Italian mills may again regain their dominance in the North African market, which they had relinquished to the Ukrainians in December. The Italian position is boosted by their offers at Euro 420-425/mt FOB and the decline in US Dollar/Euro exchange rate as compared to December. If they become dominant in the North African market again, the local market may strengthen as well. During December, though most markets in the Mediterranean region were not very strong, expectations remained positive. Early January prices in the Mediterranean, Black Sea and the Middle East regions have started to increase, or at least, to indicate rising signals. The price increases have mainly been put into effect by the Turkish mills. Supply tightness in the Mediterranean and Black Sea billet markets, as well as the sharp increases in scrap and billet prices, may cause the prices in the Mediterranean region to increase further in the coming period.