Scrap and money markets trigger international long product market

Despite Turkish long product market lost value on TRY basis, it remained unchanged on US Dollar basis since the US Dollar suffered depreciation against TRY. Domestic rebar prices for 12 mm were at TRY 750-770/mt, including VAT, ($480-493/mt+VAT) levels. The decline in Black Sea scrap since the beginning of the last week worried trading firms in the local market. The trading firms' reflection to reduce their stocks and to turn the goods on their hand to cash caused a slowdown in prices. The Black Sea scrap, which began to increase at mid-last week, hasn't shown any impact on the local market yet; however, this situation may change next week. Italy started to have difficulties in its rebar exports to both Algeria and EU countries with the depreciation of Euro against the US Dollar in the last two weeks. Two weeks ago, rebar sales were concluded at Euro 450/mt CFR to Portuguese and Spanish ports, but now, despite the early shipment advantage, consumers prefer Turkish material due to the price gap of more than $30/mt. However, the important problem for importers is that most of the Turkish producers can not ship before mid-July. The July shipments create risk for importers, who can not consider what the local prices in Portugal and Spain will be during July. The merchant bar market in Italy is strong and it is active in both domestic sales and exports to EU countries. Despite the disadvantage in exchange rate, Italian producers appear to resist to the bitter end to the Turkish producers, by using early shipment advantage especially in Portugal and Spain. Despite the Turkish producers have an upturn trend with angle offers that are at around $520/mt FOB, exports especially to Europe do not seem to come the required level. Price level of AENOR-certificated rebars in the local Spanish market rose Euro 15/mt to around Euro 535/mt delivered to warehouse on actual weight basis, excluding VAT. Despite the part of the trading firms said that they would resist to this increase, the orders of Spanish producers are full and the demand for those prices continues. Furthermore, Turkish mills' rebar offer levels of $530-535/mt CFR are acceptable as well. Ukrainian origin rebar and wire rod offers for exports remained unchanged this week compared to the previous week. Rebar offers were at $425-430/mt FOB while wire rod offers were at $440-450/mt FOB. However, the change compared to last weeks was in terms of demand instead of price. Ukrainian origin rebar was sold to Middle East at $425-426/mt FOB while wire rod was sold at $440/mt FOB. Furthermore, Ukrainian mills, which experience cut-throat-competition with the Italian mills in Algeria, seem to have an advantageous position in this competition. The markets in Middle East, Gulf and Northern Africa are also active. Israeli producers' orders seem full. Domestic market prices may indicate an upward trend. Turkish producers can also sell their rebars at $515/mt CFR in this region. However, Israeli importers require early shipments instead of July shipments. Domestic rebar prices in UAE are at AED 2,000-2,050/mt and these levels have an active trading. Most of the rebar companies in the domestic market found high these prices in the previous weeks. They postponed their huge purchases in an effort to buy at lower levels due to the slowdown in Black Sea scrap. However, UAE may start its purchases with the revival in scrap markets. SteelOrbis has heard that one cargo of Turkish origin rebar sale was concluded to UAE at around $515/mt CFR. This level and maybe higher level sales can be heard in the coming days. In the specific areas of world, markets indicated a strong trend due to scrap prices, money markets and demand. The huge change in Euro/US Dollar exchange rate seems to change balances in some regions. The market players, who considered that the prices would fall at the beginning of summer, started to wonder if the prices could finish the summer at these levels. Actually, making long-term expectations in steel market is almost impossible; however, markets appear to continue their strong position in short-term.