With only a limited number of import scrap deals heard last week, the import scrap market in Turkey has made a very quiet start to the current week. Many uncertainties prevail in the Turkish market and Turkish steel producers are waiting for these uncertainties to come to an end before deciding their scrap purchase strategies. Last week, deep sea HMS I/II 80:20 scrap was priced at $271/mt CFR in the few import deals concluded, mostly unchanged compared to the levels recorded in the previous week.
As a result of the rises seen in domestic rebar prices in May, construction contractors in Turkey requested a corrective measure from the Turkish authorities. The request was successful, with Turkey's Ministry of Economy announcing in the last days of May that the customs duty for import rebar will be reduced. Although Turkish mills' sought the removal of VAT instead of a reduction in import duty - with the latter expected to exacerbate the already wide gap between supply and consumption in the domestic market - the Ministry of Economy stated that the 18 percent VAT will be maintained but that import duty will be decreased. On the other hand, demand for rebar in Turkey has slackened compared to May due to slower construction activities during Ramadan. Buyers are maintaining their wait-and-see stance and are postponing their rebar purchases since the reduction in import duty has not yet been officially announced. All these uncertainties have been causing domestic rebar prices in Turkey to decline.
Meanwhile, the cutting off of diplomatic relations with Qatar by seven countries, together with the announcement of trading sanctions by these countries against Qatar, has deepened the uncertainties in the rebar market. Although market sources believe this crisis will be resolved in the short term, no positive development has been heard yet. Having terminated their rebar purchases from Qatar with this boycott, Saudi Arabia, the United Arab Emirates (UAE), Yemen and Libya may turn instead towards Turkish mills for their rebar purchases. Also, Emirates Steel Industries (ESI) has announced its rebar prices for June-July output after the boycott in question at higher levels than initially foreseen. All these developments provide Turkey with an opportunity to increase its rebar sales to the Gulf region.
Meanwhile, Turkish steel mills are in no rush as regards concluding new import scrap deals and are expected to shape their import scrap purchase strategies after the current situation becomes clearer.