Turkish domestic rebar spot prices fall following VAT increase

Today, July 10, Turkish domestic rebar spot prices have increased by TRY 50-150/mt, while falling by $8-12/mt compared to Thursday, July 6, against the backdrop of the currency fluctuations and recent increase in VAT from 18 percent to 20 percent, beginning as of today. Accordingly, 12 mm rebar spot prices in Turkey have settled at TRY 18,350-18,650/mt or $586-595/mt ex-warehouse, depending on the region, with an exchange rate of $1 = TRY 26.10. 

Icdas A.S has cut its rebar price by $10/mt to $620/mt ex-works today. One Izmir-based mill has also decreased its rebar price by $15/mt rebar to $600/mt ex-works today. Moreover, a few mills in the Marmara region has issued their rebar price at $620-625/mt ex-works today. In addition, one Iskenderun-based mill has issued its rebar price at TRY 18,300/mt ex-works which equals $584/mt at the current exchange rate, falling by TRY 100/mt ($16/mt) over the same period. Moreover, a few re-rollers in the Iskenderun region are offering rebar at TRY 18,500-18,800/mt ex-warehouse equals to $591-600/mt ex-warehouse at the current exchange rate.

"In general, I believe the recent VAT increase might have a negative impact on the demand side, while mills might attempt to raise their rebar prices in order to be on the safe side due to costlier production," one source mentioned. "VAT increase will be applied to all the sectors, so I doubt it will have strong impact on the buyers' end," another source commented. "Demand is already sluggish, so I am not sure it will be negative for demand, it might be some local traders’ expectation that rebar prices might fall further in the short term and they are not willing to restock material," another source mentioned. "Most end users are not willing to accept recent VAT increase, so it reflects as an additional cost for the local traders," one source commented. All in all, the impact of recent VAT increase is expected to gain clarity in the coming days.

As of today, rebar offers in the Turkish spot market are as follows: 

All prices are ex-warehouse and on actual weight basis. Prices on Turkish lira basis include 20 percent VAT, while prices on US dollar basis exclude VAT. 

$1 = TRY 26,10