Pre-election fever lifts Turkish rebar prices

Turkish rebar prices, which were on a downward trend for weeks, have seen a strong recovery this week amid improved domestic demand. Export demand has also risen compared to previous weeks but is yet to reach the domestic level.

Turkish mills’ official offer prices stood mostly at above $630/tonne fob Turkey actual weight on Thursday. Although these are down from $640-650/t a week earlier, they have bounced back from $610-615/t fob levels early this week. Offers for mesh-quality wire rod, meanwhile, were at above $640/t fob.

The price recovery has also triggered global buyers that were halting purchases during the downtrend. Consequently, Turkish mills concluded greater tonnages of sales this week, to South America, the Middle East, the EU, the UK and Africa. However, these volumes remain far off Turkey’s traditional sales in previous years and are insufficient given Turkey’s production capacity.

A Turkish mill tells Kallanish: “Although we are selling rebar at $630/t fob today, mills that are relatively smaller will register losses as our average scrap cost is above $410/t.”

Turkish mills’ conversion costs from scrap to rebar are currently diverging between $200-240/t depending on their technology and capacity.

In the domestic market, demand remained very strong on Thursday as political tension peaked. Stockists, fearing a further depreciation of the lira after the elections, are concluding purchases. Prices, which were at $645-665/t a day earlier, stood mostly at above $665/t ex-works on Thursday afternoon. Although mills sold at $657-660/t levels in the morning, they either closed sales or increased prices in the afternoon. End-user demand, however, continues to appear weak.

A stockist says: “The tension is very high and stockists are buying at every price level. However, if the expected depreciation of the lira does not occur, prices are likely to fall sharply on a lira basis. This will cause stockists to record a big loss.”

With Turkey starting to increase its rebar prices, the gap between it and the competition is starting to widen again. This poses a great risk for exports, which have just recovered.

In the scrap market, Turkish mills are continuing to buy HMS 1&2 80:20 at around $375/t cfr Turkey. However, amid increasing rebar prices and Turkey’s demand for scrap, scrap suppliers are also likely to increase their quotes.

Burcak Alpman Turkey