Waning prospects for the Turkish domestic rebar market means domestic steel mills are keeping a close eye on developments in potential key export destinations, as well as in key global demand drivers China and the US.
The recent ceasefire deal between Israel and Hamas could lead to a recovery of Turkish exports to Israel in the coming months, while there is some expectation that the Chinese government will announce further stimulus packages once Donald Trump is inaugurated as US president on 20 January for a second term. At the same time, mills producers will be keen for the Turkish government to persuade Syria's new government to soften its stance on its steep hike in import duties announced earlier this week.
Post-earthquake reconstruction work in southern Turkey is not likely to provide the same level of support to prices this year that it did last year. Earthquakes struck in the Iskenderun region of Turkey and in northern Syria in February 2023, eventually resulting in strong demand for rebar used for reconstruction work throughout most of last year. But the premium enjoyed by Iskenderun-based steelmakers as a result has become a discount in recent weeks as demand has faded, and with local supply so far failing to respond. In housing projects, rebar is required mainly in the foundations of buildings, and so even for projects that are not yet completed, the spike in rebar demand in the region may have run its course.
Recent acquisitions in the Iskenderun region by major producers Habas and Tosyali are squeezing local prices, with Tosyali's July acquisition, the former Bastug steelworks, currently operating at 75pc capacity, or 3,000 t/d, according to local sources. There could be further consolidations and also an idling of capacity in the Turkish market in the coming months, as smaller companies struggle against tepid demand and elevated costs. Tosyali is considering making a bid for Izmir-based longs producer Ege Celik, market sources said.
The export market will continue to be a challenge for Turkish suppliers this year, as it has been for the past few years, and Trump's return to office is set to push the world towards more trade barriers. The Israel-Hamas ceasefire deal, approved by the Israeli parliament today, could lead to an outlet for Turkish steel, as the Turkish government is expected to quietly allow companies to export to Israel again if fighting does not resume. Before the conflict broke out, Israel was a major destination for Turkish rebar.
The Turkish trade ministry today said it will meet with Syrian representatives next week to pursue a free trade deal, following the new Syrian government's decision to raise import tariffs steeply with immediate effect, with duties on some commodities increasing fourfold. If the higher tariffs remain in place, it could significantly dent southern Turkish rebar producers' hopes of selling large volumes to Syria from later this year onwards as the country starts to rebuild following several years of civil war.
Overall, Turkish mills will be more reliant on export opportunities this year than in 2024, with much ultimately depending on the extent to which Chinese exports continue to pressure the global steel market. The International Rebar Exporters' Association today said its hopes for a real resurgence in Chinese domestic steel demand were muted, implying that Chinese export volumes are likely to remain elevated after hitting record levels in 2024.
