Merchant bar market outlook

No activity in Turkish merchant bar market is seen yet. Since the prices started to follow a downward trend, merchant bar purchases in the local market have declined. While there are various prices heard, equal angle prices are at TRY 780-800/mt, excluding VAT ($530-550/mt, excluding VAT), flat bar prices are at TRY 800-850/mt, excluding VAT ($550-560/mt, excluding VAT). Local prices in Turkish market indicated a downward trend last week due to the decline in $/TRY exchange rate. Local buyers, that saw that prices started to decline, slowed down their purchases with the expectation that the prices might fall further. Consequently, silence dominated the market last week. When we look at merchant bar exports of Turkish producers, we see that there are not many export activities since Europe is on holiday and due to the developments in the Middle East. While there were various prices, the general price range was $540-545/mt last week. The calmness in the local Israeli merchant bar market and the high-level of buyers' inventories force Israeli buyers to wait. With the expectation that the prices would decline further, most of the buyers reveal their intention not to conclude any purchases till the end of August or to wait the offer levels of around $565/mt CFR to decline slightly. When we look at European market, we see that exports to this region have slowed down due to the holiday season; however, it should in the meantime be noted that there are sales, although for small tonnages, concluded to this region. Moreover, another important issue that will affect the merchant bar market is that CE Marking certificate shall be required from September 1, 2006 if a structural steel manufacturer wants to sell its products to the 25 EU and 3 EFTA member states as of September 1, 2006. If the rarity of the Turkish CE certificate holders are considered exporters should immediately take action to receive that certificate. For Turkish exporters EU is an important market after the US, in terms of merchant bars, which makes holding the CE certificate of great importance. We also see a kind of tranquility in the North African market. The developments in the Middle East also have their impact on this market. Of course, China, which has power to influence all markets, should be kept in mind, too. Low-priced offers from China also cause producers that conclude sales to this market difficulty. The efforts to enter this market by Chinese mills, that were not active in this market before, are a result of the stillness/silence in their own local markets. The dull local market conditions force China mills to export. Expectations are in the direction that Chinese mills will increase their offers to other markets, and even may withdraw their offers with the revival of demand in the Chinese local market and in the Far Eastern market. In the UAE market, local demand is not strong but market is slightly active. This market especially receives very low offers from China. The general expectation in the merchant bar market is for prices to start following an upward trend backed up by a rise in demand late August. With a possible revival in the rebar market this week, a revival may be seen in merchant bar market, as well.