The Turkish domestic rebar market did not have the best of starts to the week. It was possible to find prices at TRY 930/mt ($668/mt + 18 percent VAT), including 18 percent VAT, in southern Turkey. Prices in the Izmir region were at TRY 950/mt ($682/mt + 18 percent VAT), including 18 percent VAT. Prices in the Marmara region were at around $605/mt. Turkish domestic rebar prices, especially those in the southern region, were lower than Turkish export prices due to the high stock levels in the domestic market and also due to a feeling of panic. However, there was a small movement towards mid-week. With the slight rise in the US dollar exchange rate, producers can afford not to give prices below TRY 950/mt ($682/mt + 18 percent VAT), including 18 percent VAT.
Turkish mills are offering rebars to the Europe at $635-640/mt FOB on actual weight basis for June loadings. Offers for some Middle East countries and to Baltic countries that do not require homologation certificates are at around $610/mt FOB. Offers for the UAE are at $630-635/mt CFR on theoretical weight basis. Despite the softening scrap prices, for the time being the Turkish mills are restraining any impulse to reduce their prices so as not to panic European customers - since the European domestic market is still strong and the €/$ and £/$ exchange rates are high.
Prices are continuing their strong movement in Europe. Most Spanish producers have increased their prices by €10/mt. This week, the price level of AENOR-certificated B500S 12 mm rebar in the local Spanish market is at €620-630/mt delivered to warehouse, excluding VAT. Producers were expected to increase prices higher than this level, but it did not seem likely that they would achieve the higher increases. On the other hand, it has been heard that a few producers who are more fully booked have increased their prices higher than their competitors.
Demand is generally good across southern Europe. However, the continuous rise in prices has caused a strong increase in trading firms' stocks. This situation may have the knock-on effect of reducing the traders' purchasing tonnages. Therefore, southern European producers, especially the Italians and Spanish, may focus on North Africa in order to protect their domestic markets. Furthermore, the strong northern European market may become attractive to southern European producers in the coming period.
Prices in northern Europe are not expected to fall, due mainly to the strong Russian domestic market. This latter market is also expected to maintain its robustness next month, which may cause Ukrainian producers to increase their prices further for June production.
The situation in the Middle East is slightly different from that in Europe. Turkish producers have reduced their prices under the effect of the softening scrap prices. Furthermore, the decreases in CIS billet prices may create a negative situation in the Middle East and North Africa (especially in Egypt). However, the market has not yet recorded any noteworthy softening. Furthermore, the effect of the Chinese VAT rebate cancellation has not yet been fully seen in the rebar market. Still, there is a possibility that this will have a positive reflection on the market. For the time being, most market players consider this situation only as a correction. On the other hand, if prices continue to decrease, the opinions of the market players may change.