Turkish longs producers bemoan weak demand, high freight

Turkish long steel producers have been forced to decrease their prices further after the expected demand recovery failed to materialise throughout August.

Mills’ rebar prices, which stood at $690-700/tonne fob a week ago, are now pegged at $680-690/t fob Turkey actual weight. Wire rod offers meanwhile decreased to $780-800/t fob and merchant bar quotes fell to $710-730/t fob. However, there are also offers at lower levels from some long steel producers depending on their production costs and utilisation levels.

A Turkish rebar producer tells Kallanish: “We have sold a small cargo to Israel this week, containing rebars and wire rods. That’s all. In a falling market, all buyers are halting purchases. In Asia, even as demand recovers, the biggest issue is the freight rates which have increased to $70-80/t from $45-50/t. On the other hand, India offers competitive prices in the region. The situation is becoming critical.”

A wire rod producer, who is more bullish, expects to see a revival in the market as of next week after the end of the summer holidays.

Although there are inquiries, albeit limited, Turkish long steel producers are seen having difficulties in converting them to sales. Consequently, they are trying not to pass up firm bids, even if they are at a lower price compared to their offers.

A merchant bar producer is heard to have accepted to sell angles at $685-690/t fob after offering the material at above $700/t fob.

“Scrap has to settle first,” says a producer. “When scrap prices continue to fall, buyers expect lower long steel prices and halt their purchases.”

Mills, however, are hoping to seen an improvement in rebar demand before initiating their scrap purchases (see separate story).

Demand for long steel products in Turkey’s domestic market, meanwhile, is not any different. The market is highly dependent on exchange rates and domestic buyers have no confidence in the market. A rebar mill sold at $660/t ex-works in the domestic market on Wednesday. Decreasing prices and the stronger lira are causing demand to come to a standstill.

Burcak Alpman Turkey