Turkey rebar: Mills give room for local demand

Turkish mills reduced lira-denominated domestic rebar offers only slightly today despite the significant appreciation of the lira against the US dollar, in expectation of demand increasing from domestic stockists. The US dollar value of domestic rebar offers increased by $15-17/t in some cases.

The Argus weekly Turkish domestic steel rebar assessment decreased by TL240/t to TL3,810/t ex-works including value-added tax (VAT), which equates to $619/t ex-works including VAT, or the equivalent of $523.3/t ex-works excluding VAT.

The Turkish central bank announced its decision to increase repo rates by over 6 percentage points to 24pc after the bank's monetary policy committee meeting earlier today. The lira appreciated from TR6.53:$1 at 11:40 BST to TR6.15:$1 at 13:10 BST this afternoon.

In some cases, Turkish mills left rebar offers unchanged compared with yesterday, but some Turkish traders said it may be "wishful thinking" on the part of mills when there are no guarantees of increased demand.

At the same time, domestic stockists know Turkish mills are likely to sell a large volume of rebar overseas in the second half of September, and that domestic supply could become limited in 2-3 weeks' time.

"We are concerned that mills are looking for $535-540/t ex-works equivalent offers in a few weeks' time, so demand will come from some stockists now but we do not expect anything dramatic," one large Marmara stockist said.

An Izmir mill was confirmed to offer TL3,850/t ex-works immediately after the Central Bank's announcement, including VAT. This is equated to $527/t ex-works excluding VAT, up around $15/t compared with its yesterday offer level.

An Iskenderun mill was confirmed to offer TL3,800/t ex-works, which equated to $523.5/t ex-works excluding VAT. The offer was only valid today if the exchange rate remained below TR6.2:$1, a level it breached for a 40 minute period but then returned below.

In the overseas markets, importers said that Turkish mills had already started telling them that domestic market demand is increasing, and that supply for overseas markets could become limited. This is a story that Turkish mills have been telling domestic stockists about overseas demand.

But there is little concern about Turkish supply to northern Europe. Northern European bids for Turkish rebar are expected to increase above current levels of $510/t fob Turkey on an actual weight basis, but those importers expect Turkey's focus to remain on retrieving US dollars from the overseas markets.

A Singapore importer made a bid for a Marmara mill's rebar at $540/t cfr Singapore on theoretical weight yesterday evening for mid-November shipment. Given Turkish mills are making two port combined shipments to south-east Asia to curb freight rates, each mill has differing success in achieving low enough freight rates. But considering deals and freight rates of the past month, the actual weight fob price of this offer is expected to be around $511-513/t fob Turkey, the same fob levels Turkish mills sold almost a month ago to this destination when the Turkish scrap import price was at similar levels to today.

The Argus daily fob Turkey steel rebar assessment increased by 40¢ to $514.2/t fob Turkey on an actual weight basis today.