Turkey rebar: Index up, mills maintain offer levels

Turkish export rebar prices edged up today as the country's mills kept their offer levels unchanged in order to achieve increased margins through falling scrap import prices, leading some buyers to lift their bids slightly to conclude deals.

The Argus daily fob Turkey steel rebar assessment rose by $1/t to $465/t fob Turkey on actual weight basis today.

As reported by Argus at the end of last week, mills have been expected to hold back from putting forward new rebar export offer levels since the Turkish scrap import price came under its most significant pressure on 10 May — falling from $290/t cfr to $285-286/t cfr Turkey — in order to take advantage if the scrap rebar margin widens.

At the same time, some of the small tonnage rebar deals done since 10 May are for second half of June shipment, and will be produced from scrap melted at higher price levels than today's.

Considering today's level, there is a strong possibility that rebar export prices could fall back below $465/t fob Turkey on actual weight basis again, depending on mills' strategies to maintain or even increase their share in the southeast Asian import market. Several Turkish traders agreed that there is a huge selling opportunity for Turkish mills now that they pushed scrap prices down to levels which increase scrap-rebar margins.

That southeast Asian demand is now influenced by the price drop in the Chinese domestic market.

Up until perhaps the end of this week, Turkish mills are expected to tell many small-tonnage overseas rebar buyers that they require $465-470/t fob Turkey, particularly if the scrap import price is not settled and overseas buyers still have no clarity about the raw material price and direction. Again, this will be to increase their profit margins in some cases, but also because some of the material produced comes from higher-priced scrap.

Mills also argue that because European rebar import demand is for prompt shipment for end of June delivery, those buyers have to pay premium prices. Many of the large European rebar importers are aware that the Turkish scrap import price has fallen to $285-286/t cfr Turkey, and that they should be testing Turkish mills with $455-460/t fob Turkey bids. There are likely to be prolonged Turkey-Europe negotiations for these two reasons.

Turkey's stockist domestic demand was weak today. Mills decreased offers slightly owing to the slight appreciation of the lira against the US dollar compared to the afternoon of 10 May, and the falling Turkish scrap import price.

An Iskenderun mill was confirmed to offer domestic rebar at TL3,360/t ex-works including value-added tax (VAT), equivalent to $467.20/t ex-works excluding VAT.

But Iskenderun stockists said that the mill accepted discounts of TL30/t below their offer level, equivalent to $463.10/t ex-works excluding VAT.

Payas and Izmir stockists' bids today averaged TL3,300/t and TL3,360/t ex-works including VAT, respectively, equivalent to $458.80/t and $467.20/t ex-works excluding VAT.

A Karabuk mill was confirmed to offer 8-10mm diameter domestic rebar at TL3,425/t ex-works including VAT, equivalent to $476.20/t ex-works excluding VAT.

All domestic rebar prices today are based on an exchange rate of TL6.0936:$1.

A trading firm was confirmed to offer Turkish billet at $455/t cfr Indonesia for end-of-June shipment today but no counter bid was given.