Turkish rebar market indicates upward trend

With the appreciation of US Dollar against TRY in the local Turkish market, prices on TRY basis increased. The rise in rebar export prices since the beginning of May was expected to affect local Turkish market; however, in order this to happen, spark was needed. In fact, the medium appropriate for price increases was ready in the previous weeks, that is scrap prices and export prices were rising incessantly. However, being uneasy, local trading firms, which were holding stocks, were reluctant to purchase goods for stocks. The expected spark occurred through the end of last week with the rapid appreciation of US Dollar against TRY. Trading firms purchased goods for stocks through the end of last week. With the rise in prices on TRY basis, majority of trading firms sold their stocks for profit realization. The fluctuation in US Dollar exchange in the middle of the week caused trading firms to wait before building up stock. Prices for rebars in 12 mm dia in the local Turkish market are at TRY 850-875/mt ex-works, including VAT ($486-500/mt+VAT). The general expectation in the market is that local prices will rise on US Dollar basis due to the export prices and higher scrap prices. However, in order this to happen, US Dollar exchange should leave its fluctuating trend and start to follow a horizontal trend. When we look at rebar exports, we see that offers are generally at $500-515/mt FOB levels. It is heard that exports to EU countries, such as Spain and Portugal, have been made at $510/mt FOB. Strong local market in Europe and strong Euro/US Dollar exchange rate create an advantage for Turks. On the other hand, exports to Italy at the beginning of 2006 slowed down due to the rise in Turkish rebar prices for export. However, Italian local market has been following an upward trend since the beginning of May, although Italian mills are not able to be very active in their exports to Algeria. This week, offer levels for rebars in the local Italian market have increased to Euro 430-440/mt on delivered to customers' premises, excluding VAT, open account 60 days. If this increase continues and Euro/US Dollar exchange rate keeps its level, Turkish mills may again become active in their export to Italy. Offers given to the UAE early this week were at around $520-530/mt CFR on theoretical weight basis. Local UAE market is strong and this market needs goods due to the accumulated demand. Importers in UAE are mostly worried about not finding any early shipments. Late July/early August is not a period importers in the UAE are willing to make shipments. However, order books of Turkish mills are filled by demand from US and Europe. If market continues its upward trend, offers to the UAE may increase further.