Winter affects Mediterranean, Black Sea rebar market

The approaching winter season has started to show its effect on demand and prices. The prices are in a downward trend in south Europe, Black Sea and Turkey. Turkey's domestic rebar prices were in a price range of TRY 850-880/mt early this week. However, two producers have sold 17,000 tons of rebar in a sales campaign they carried out in Turkey's Marmara region. Some firms have expected that this decline would affect the other regions and that prices would continue to drop further. A feeling of panic was felt in the market, but for one day only. On Thursday, prices in the Marmara region were raised to TRY 855/mt. This was a source of relief to trading firms. On the export market front, there have been no positive returns from Europe for Turkish rebar offers at $490-500/mt FOB. Turkish producers'sole potential market seems to be Gulf region since the US has not been in the market in late October. The latest sales heard for the Gulf region were at around $495/mt CFR on a theoretical weight basis. However, some buyers expect prices to decrease further as they consider that they hold a good hand now in the price game. If the US enters the market for late January shipments, customers in the Gulf may lose their current advantages. The situation in the domestic UAE market is not good. After a quiet period because of Ramadan, the increase in supply due to imported goods has caused trading firms to sell their goods as quick as possible. The price level of rebar in the local UAE market is at around AED 1,950-1,960/mt delivered to site on a theoretical weight basis for 3- and 5-month deferred payment, excluding VAT. The prices in the Italian domestic market also dropped slightly to Euro 440-445/mt last week. It has been heard that demand is not great. Meanwhile, the winter season effect is noteworthy in south Europe. Italian producers have had a significant boost in the North African market since the Ukrainian producers directed most of their production to Russia in September and October. Also, the slowdown in the Euro/US Dollar exchange rate in that period supported the Italian producers. However, Italian producers may experience cut-throat competition again as the Ukrainian producers have reduced their offers to $460/mt for North Africa and the Euro/US Dollar exchange rate has increased to 1.28 level. On the other hand, it is heard that some Spanish producers are giving rebar offers to North Africa, but not in huge tonnages, due to the weak market conditions. On the CIS market front, the slowdown continues in Russia. This situation may affect the CIS and the Balkans states with Latvia. Russia has been importing a huge part of the rebar production in this region. However, the seasonal slowdown in demand in Russia causes Ukrainian and Latvian producers to return their traditional markets. While Ukrainian producers are giving higher offers to the Balkans states, they have reduced their offers for the Algerian market - an important market for them. Furthermore, the latest offers for Syria are at $495/mt CFR and a sale concluded to the Gulf region was slightly over $450/mt FOB. The seasonal effect is noteworthy in the Mediterranean and Black Sea with a softening in long prices. Generally the market players were expected these decreases, so there has been no shock in the market. However, prices have recorded a rapid decline in some regions. The producers in the market and most of the firms are expecting prices to increase again towards the year-end as they did last year. The latest scrap bookings, which did not record a decline, support this expectation. However, if the prices continue their downward trend, the producers may want to increase the pressure on scrap in an effort to protect their margins.