Rebar producers in Turkey have continued to face low domestic demand, resulting from some shrinkages in construction activity, especially in the southern regions of the country, coupled with the downward sentiment in the import scrap market, at least for now. Many believe that scrap prices are nearing the bottom, having fallen previously by a larger amount than initially expected. The situation in the rebar and scrap segments continues to weigh on billet pricing, creating uncertainty among buyers and making them place lower bids.
Currently, local billet price ideas in the Iskenderun region are at $540/mt ex-works from most of the mills, while only a few voice $545/mt ex-works. Bids from the buyers are at $530-535/mt ex-works, with no deals reported yet. In the Izmir region, where the workable rebar prices have slid to $565-568/mt ex-works (for cash payments) at the lowest, the billet price should be at $530-540/mt ex-works, but offers are mainly at $545-550/mt ex-works still. “If the previous [scrap purchase] rounds are taken into account, the average scrap price should be at around $400/mt, which means a billet cost at close to $550/mt,” a source told SteelOrbis.
In the import segment, ex-China material is on offer for September shipments at $518-520/mt CFR, slightly down over the past week, with not many takers seen. Sources largely believe that now once scrap prices have fallen, it is more logical for mills to go for their own billet production at the approximate cost of around $530-535/mt, rather than to book import billet for October delivery in the best case. No Indonesian or Malaysian billet has been on offer in the Turkish market.
Ex-Iran small spot lots for deliveries by truck are offered at $475-485/mt delivered still, mainly to the Karabuk and Iskenderun regions. However, some sources have been reporting offers of 20,000-50,000 mt in bulk cargoes as well, mainly at $480/mt CFR, with the potential workable levels assessed at $475-480/mt CFR. Moreover, according to some market players, the level of $480/mt CFR was accepted by a couple of buyers in past weeks for 30,000 mt lots.
The SteelOrbis reference price for ex-Russia billet has softened by $5/mt over the past week to $475-480/mt FOB Black Sea. Most offers have been heard at $480/mt FOB or above, which translates to $505/mt CFR to Turkey, while the previous tradable level for this origin was at $510/mt CFR. But, with the recent depreciation of the ruble, some small discounts below this level have become possible. The exchange rate has dropped to $1= RUB 74.9, versus the lowest level at $1= RUB 71-72 two weeks ago. There have been no offers from Donbass, the Ukrainian plants occupied by Russia, and some market sources said that none of the blast furnaces in the area are in operation. “I suppose both Russia and China will drop down to the $490s/mt CFR soon,” a Turkish source said.
