Posted on 12 Nov 2021
Turkish rebar producers are facing weak demand in the global market while the pressure on prices rises. Mills are mostly keeping offer prices stable, however, as they are unable to secure scrap at desired prices.
Turkish rebar export quotes are mostly at $740-745/tonne fob Turkey actual weight, though higher and lower prices are also available from some producers.
With bearish sentiment arising from price drops in China prompting rebar buyers to exert extra pressure on prices amid weak demand, it seems difficult for Turkish producers to gain a foothold in export markets.
A Turkish mill tells Kallanish: “It’s been a very slow week. We have sold small quantities to Israel but demand in this major market has also weakened significantly.”
“Demand is seen lacking in almost all destinations,” says another mill. “Asia is hopeless, the US awaits lower prices, Canada has already bought more-than-sufficient quantities, Latin America has started exporting rather than importing, quotas are the main issue in the EU, in Africa we are barely competing with CIS producers. There’s no market left to cover Turkey’s excess tonnage.”
“The reason that keeps prices at these levels is scrap prices,” says a third producer. “We have been unable to buy scrap at lower levels. Thus, we are refusing to sell rebar at lower prices while we cannot guarantee a reduction in production costs. Our costs have already increased significantly due to sharp increases in energy costs.”
Producers claim rebar production cost from scrap has increased to $190-200/t from their traditional $160/t level following the rises seen in energy costs.
Although some producers say they would consider cutting production rather than buying scrap, a trader thinks they would rather sacrifice margins.
Almost all mills agree rebar prices are likely to come down under current conditions unless China records a significant recovery. However, they are refraining from decreasing prices before achieving a fall in scrap values. Although they are keeping official prices unchanged, they seem to find bids at $725-730/t fob actual weight workable.
In Turkey’s domestic market, meanwhile, prices continue increasing on a lira basis due to the weakening of the lira per dollar. Both stockists’ and buyers’ demand, however, is weak despite the continuation of the weakening of the lira and expectations of another loan rate cut next week. Although mills are trying to hold their domestic offers at $745-750/t ex-works, there are offers at $730/t ex-works from some stockists and re-rollers. The lira was at 9.91/$1 at close on Thursday, up from 9.82 a day earlier.
Although the long-awaited recovery seen in China raised hopes in the Turkish market on Thursday, there are questions over its sustainability. Scrap offers, meanwhile, are seen at above $500/t cfr for premium HMS 1&2 80:20, while demand remains weak despite Turkey’s continuing need for December-shipment scrap purchases.
Source:Kallanish
