Following the scrap deals concluded in Turkey in the middle of last week, at the start of the current week a rise in rebar prices finally seemed possible in the local market. However, as rebar prices in this market decreased to the level of TRY 720/mt ex-works including VAT from the late July level of TRY 1,900/mt ex-works including VAT and also due to the global financial crisis, the possibility of an uptrend in the rebar prices in this market was still thought to be unlikely at the start of the week. Having not expected the huge price decrease of TRY 1,270/mt seen from the second half of July up to last week, traders were caught with high levels of stock bought at high prices. Over the period of the continuously declining prices, end-users in the local market had delayed their purchases in anticipation of even lower prices, whereas the traders with their high stock levels found it really difficult to reduce their stock levels. Some traders even incurred irreparable losses and were forced to declare bankruptcy. For all these reasons, traders have this week been cautious in their approach to the price increases in the local Turkish market and, accordingly, have not increased their stock tonnages.
On the other hand, the failure of rebar producers in Turkey to announce prices since the beginning of the current week has caused significant stress in the market. Traders and end-users have emphasized that the lack of rebar price announcements is an indication of imminent price increases. Thus, they have made purchases whenever possible. Observing the price momentum in the market, the end-users, who up to now had been waiting for the bottom point in order to make purchases, have started to buy before prices climb to higher levels. Accordingly, the price levels in Turkey's Karabuk region have this week reached TRY 900/mt ex-works including VAT ($494/mt excluding VAT).
For the first time since the start of the downtrend approximately four months ago, local traders in the country have increased their stock levels due to the improving activity in the local market. However, they are still proceeding with caution. Availing of the advantages of the increasing local market, it is not expected that local traders will increase their stocks to high levels within a short period time. Rebar prices in the local Turkish market have started to increase primarily due to the higher raw material prices, not on the back of end-user demand. Hence, the progress of end-user demand will be the object of considerable curiosity in the coming days. The steady rise of prices and the stability of the market ultimately do not depend on raw material prices, but on end-user demand.