Observing the situation in the Turkish merchant bar market in the last 10 days, we see that prices have continued to follow their softening trend. Both in the domestic and export markets, offers have decreased by $20-30/mt as compared to 10 days ago.
On the one hand, an ex-Europe HMS I/II 70-30 scrap booking was concluded last week at the level of $218/mt CFR Turkey; on the other hand, CIS origin billet prices have declined to levels of $350-360/mt FOB, while a local producer announced a billet price of TRY 729/mt including VAT ($368/mt excluding VAT). In addition, the current demand shortage has also forced merchant bar producers to soften their prices. Last week, Turkish domestic merchant bar prices were in the range of TRY 770-820/mt ($458-488/mt), while, as of yesterday, February 16, prices have decreased to levels of TRY 750-800/mt ($446-476/mt). The low levels of demand for merchant bar in Turkey may be partially explained considering the current situation of the domestic construction sector. Other main problems in the domestic market are the trouble encountered in collecting payments and the overall lack of confidence. Merchant bar producers, given the quiet period they are going through in terms of their sales performance, can ill afford to experience difficulties in obtaining payments; however, it unfortunately appears likely that such problems will be increasingly seen in the future in markets where hot money does not exist. Currently, firms in the Turkish market are not holding back from giving discounts to their customers, since they do not think that payment collection will be an issue.
As underlined in our previous analyses, Turkey's export market for merchant bar has been performing better than its domestic merchant bar market. Demand coming from Africa in particular has recently helped producers maintain their motivation. However, offers at the levels seen 10 days ago have also started to be rejected in this region. In the past week export offers given from Turkey declined to levels of $490-520/mt FOB. It is also mentioned that some firms have offered at below these levels. Recently, demand has been seen in particular for 140 mm IPE from Iraq, the Middle East and Africa, with the most recent bookings for this product being concluded in the range of $510-520/mt FOB.
This week, the Turkish mills will as usual keep a close eye on scrap and CIS billet prices when giving their merchant bar offers. It is likely that the softening trend observed in merchant bar prices may switch to a slight upward acceleration again, as mills begin their scrap and billet purchases. However, it is still uncertain when this purchasing activity will commence. It is also said that the mills are concerned that the consistent softening seen in scrap and billet prices could continue and that, for this reason, low tonnage purchases are being seen for the time being.