Over the past week, the European merchant bar market has been increasingly coming under the influence of the Christmas-New Year holiday season. The European merchant bar market, which normally starts the holiday period on around December 24, has this year commenced its break one week earlier due to the negative situation in the market. Merchant bar mills in some countries are expected to increase their prices in the post-holiday period, while it is heard that production cut-backs will continue in early 2009.
With the conclusion of its own holiday period, the Turkish domestic merchant bar market opened the week with the same levels seen in the pre-holiday period, while through the end of the week there were some softenings observed in the price levels. As of December 19, small IPN-UPN were priced at TRY 730-760/mt ($480-500/mt), angles were at TRY 730-760/mt ($480-500/mt), while flat bars and square bars were standing in the range of TRY 740-760/mt ($487-500/mt) in the Turkish merchant bar market. It was also heard that some mills have given offers at below these levels. Demand showed slight improvements early last week in the domestic market, though after mid-week a sluggishness was observed in terms of demand. It is likely that mills may give offers at varying levels, depending on their stocks, before the New Year.
Looking at the export side, offers have remained unchanged, although the euro has increased in strength against the dollar. The African and US markets have continued to be the main sources of demand, even if at low levels. Turkish mills have continued to give offers to the eastern European markets. It is heard that offers have been given to Romania in particular. Also, the average increase of $20/mt seen in ex-CIS billet prices has not been reflected in finished steel prices by Turkish mills. As of the 51st week of 2008, Turkish mills' offers to the export markets stood at $500-520/mt FOB for angles, for NPI and NPU they stood at $520-530/mt FOB, for 80-100-120 mm IPE offers were in a range of $550-560/mt FOB, for 80-100-120 IPE A at $560-570/mt FOB, for 80-100-120 IPE AA at levels of $580-590/mt FOB, while flat bar offers stood at $510-520/mt FOB. The prices in question are on actual weight basis and for December/January shipment.
As for the southern European countries such as Italy and Spain, rumors were circulating that mills may increase their prices with the conclusion of the Christmas-New Year holiday. Last week, the prices of merchant bars with sizes 140 mm and below stood at €500-520/mt ($698-725mt) ex-works in the Italian domestic merchant bar market. Meanwhile, in the Portuguese merchant bar market it is observed that 80-160 mm IPN and UPN prices have decreased to the level of €550/mt ($767/mt), down €25/mt ($35/mt). Also in Portugal, the prices of angles, flat and square bars with sizes 140 mm and below have remained unchanged at the levels of €480-500/mt ($670-698/mt) for delivery to customer.
With the conclusion of the holiday period market players will seek to overcome the lack of confidence seen in the markets. At the current juncture, the role of the banks is extremely important. Should the banks' attitude in terms of issuing credit fail to show any change, international trading will continue to be affected negatively.