While Mediterranean end-user merchant bar demand is generally maintaining its silence, the North African, Middle East and Far East markets have been keeping up strong levels of overseas purchases. Traders and end-users are acting with caution; they do not attribute significance to the prices which are still rising despite the fact that demand is low in the European and Turkish markets. Market players say that all prices from raw materials to long products are at very high levels compared to past years, and that they thus prefer to wait instead of making offers.
Looking at the Turkish market, it should be highlighted that local merchant bar prices are being affected by the export price levels as well. Turkish producers and exporters, who are not under pressure since they are finding acceptance in significant importing regions, have been offering to the local market with prices close to their export levels, rather than at levels acceptable in Turkey. Merchant bar offers in the Turkish export market are as follows: angles at $1,020-1,030/mt, flat bars at $1,020-1,040/mt, NPI-NPU at $1,020-1,040/mt, 80-100-120 mm IPE at $1,065-1,075/mt, 140-160 mm IPE at $1,100/mt, and 80-100-120 mm IPE AA at $1,075-1,085/mt - all prices are FOB, on actual weight basis and for June shipments.
Producers and exporters are pleased with their situation as they know that, even if the high prices fail to gain acceptance in the local Turkish market, they can redirect the material which they had reserved for the local market to the export market. Although it seems that the export prices and iron ore costs are the main factors pushing up prices, the upward price movement in scrap and the record peaks in oil and freight rates can also be described as principal factors causing long products to reach these high levels. The merchant bar prices this week in the local Turkish market depending on size, thickness and region have been at the following levels: small NPI-NPU at TRY 1,250-1,260/mt, 10-120 mm IPE at TRY 1,265-1,275/mt, angles at TRY 1,230-1,280/mt, flat bars at TRY 1,240-1,290/mt and square bars at TRY 1,260-1,280/mt - all prices are ex-works, on actual weight basis and excluding VAT. The prices also may differ in the sales price levels of traders (who had previously taken position), which are lower than the mills' levels.
China, which has been seen as a "sleeping giant" in the market since the beginning of 2008, has been trying to meet local demand while at the same time struggling with export duties - the most important barrier facing exports - and also with the factors driving up costs mentioned in the previous paragraph.
So, does China - which is ranked number one in world steel production with 422 millions metric tons - not want to take a share in this large export pie characterized by high price levels? If it does choose to claim a share, then how rapidly will this affect prices? Market players state that currently there is a worldwide billet shortage and that they are treading very carefully. Today, rolling mills concluding billet deals should follow all movements in the market in the period between the billet purchase and the manufacturing of the end product. Such rolling mills should also analyze today's selling and purchasing prices and attempt to gauge the levels they may be reach in the future.