With the Egyptian producers decreasing their rebar prices for the local market, both Turkish domestic and export market rebar price levels entered into a downtrend at the beginning of July. Since then Turkish producers have started to focus on sales to the Far East. Meanwhile, the Turkish mills' scrap purchases registered a strong slowdown as importers from the Middle East and North Africa reduced their rebar purchase activity and also as prices of both finished steel and scrap have been at high levels during the past month. Turkish producers, whose scrap stocks are at very low levels for August production, have been cautious as regards scrap purchases over the past month as end-user demand has been slow and also due to the approach of Ramadan.
During the past month, Turkish mills' production operations almost ground to a halt as scrap prices did not see any softening due to the strong demand from both the local US and Far East markets and also given that finished steel product prices in the Turkish export market declined to $445-470/mt FOB.
While it is observed that some producers started to buy scrap again late last week and during the current week, other producers did not resume scrap purchases. In the middle of the current week, while it is heard that some producers only did business via cash payment, it is observed that some producers hesitated to give rebar offer prices due to lack of scrap in their stocks. In some regions in the local Turkish market this week, it is heard that some mills sold rebar with a discount at TRY 775/mt ex-works including VAT ($443/mt excluding VAT). In the local market, rebar prices have been at TRY 775-860/mt including VAT ($443-491/mt excluding VAT).
While it is expected that Turkish producers may reflect the price hikes in scrap in the rebar price levels in both the local and export markets, possible supply tightness resulting from some producers' reluctance to offer materials may cause prices to go up if demand is seen from traders and end-users.
However, Turkish and Middle Eastern traders who do not want to enter Ramadan with high-priced rebar stocks will likely adopt a very cautious approach in their scrap and finished steel purchases and will likely be eager to enter Ramadan with low stock levels.
In the UAE domestic market, where rebar prices are currently at $490-515/mt delivered to site on a theoretical weight basis, local traders and importers will also try to minimize their stock levels as Ramadan is getting closer.
End-user demand in Saudi Arabia has this week registered a slowdown compared to previous weeks. However, this week it has been heard that producers in this country do not plan to reduce their rebar price levels, which have been stable since the beginning of 2009.