Latest outlook for merchant bar markets

A very active week has been seen in the Turkish billet market. On February 27, Turkish mill Isdemir increased its billet prices by $40/mt, the mill's production now being sold out up to late May. In addition, Kardemir upped its billet price to $535/mt. It then closed for sales after concluding deals for 25,000 mts of billet. The long-standing billet shortage continues to affect the rolling mills in Turkey. The pricing trend for merchant bar is up since current domestic billet prices are at $535-550/mt, while the $/TRY exchange rate has increased due to the improvements in the global economy. Higher scrap prices have also contributed to the rise in merchant bar prices. Thus, trading firms are treading with greater caution. One of the reasons of the continuing strength of prices in the market is that producers are directing their sales to the overseas markets, thus causing a lack of availability in the domestic market. As mentioned in our previous analyses, shortages are still being experienced in NPU and NPI profiles. Turkish rolling mills are offering angles for export at $650/mt FOB, flat bars at $660/mt FOB, and NPU and NPI materials at $670/mt FOB. The offers for angles are for April shipment, while those for IPN and UPN are for mid-to-late May shipments. The offers for IPN and UPN to be shipped in mid-to-late May have caused an increase in caution on the part of customers. Profile prices in the European domestic market are increasing. The rise in Italian base prices last week and the increase of €30/mt in the prices of the Greek mills have been followed by Corus' profile price increase in the UK. The reasons for this general upward trend are the favorable weather conditions, decent demand in Europe and higher scrap prices. Although the European market is active, it is showing greater caution to offers from Turkey. A Chinese effect is currently being seen in Africa. Chinese mills have started to make offers in the region's markets after their return from the Chinese New Year holiday. Currently, sales are being heard for angles at $470/mt FOB and flat bars at $490/mt FOB. The favorable Chinese offer prices are causing the African countries to turn more and more to China. The increase in Chinese exports to the US - which was a significant customer for Turkish merchant bars last year - is further evidence of the Chinese effect on the profile market. Also, Chinese exports to the UAE, Egypt and Israel have increased. Europe is taking a more cautious attitude to Turkish goods, since Turkish producers have increased their prices on account of the higher billet prices. In addition, the effects of the increased Chinese goods being sold in Africa, the Middle East and the US will become clearer in the coming days, especially as regards third quarter purchases.