The Turkey region steel market is showing long-running stability in pricing trends related to rebar exports and billet and scrap imports, despite a recent surge in domestic rebar pricing, according to analysis using S&P Global Platts Turkey ARC indices.
At the end of May, domestic prices for the reference construction steel surged outside typical premiums tracked over export prices.
Platts domestic rebar prices excluding VAT were 15.44% above export prices, based on Platts data for May 26, well above an average premium for domestic prices of 2.5% seen over June 2016 through early April 2017.
In the local market, there was talk around expectations for Turkey's government to finalize measures to increase overall availability in the Turkish rebar market, with cabinet approval sought to reduce customs duties on rebar imports.
Domestic demand was expected to slow gradually due to Ramadan and rising availability and stocks.
The higher domestic rebar prices, and import scrap and billet trends may signal more volatility around relative values for the commodities than comparisons with rebar export prices alone.
Rebar export prices have been in a tight range of $427.50-$437.50/mt FOB Turkey since early May.
The implied melt margin using TSI scrap and Platts rebar export spot prices has strengthened over May from April, with the average in May at $157.62/mt, up from $153.69/mt in April.
The export rebar-import scrap spread was assessed Wednesday at $159.50/mt, down from $162/mt day on day.
For domestic rebar sales, the implied melt margin and that available for re-rollers, given the progressive rise in domestic rebar prices over the past weeks, would be even higher.
Against this backdrop, import scrap prices have been stable since earlier in May.
SCRAP WEAKER
Scrap remained weaker than export rebar and Black Sea imports of billet in relative pricing strength over the past 30 days trading data for the three commodity groups, based on Platts Turkey ARC data.
As for re-roller margins in Turkey using Platts Black Sea billet against export rebar, with indicative shipment costs for billets into Turkey, the trend remained weak.
The export rebar-billet spread on a landed Turkey basis indicated at $24.50/mt on Wednesday, compared with averages of $23.52/mt in May and $24/mt in April.
The Turkey ARC Scrap 30-day index was at minus 0.38% Wednesday, up from minus 0.78% Tuesday.
The Turkey ARC Billet 30-day index ended May at minus 0.31%, up from 0.16%.
The Turkey ARC Rebar 30-day index was at 0.07%, from 0.58%.
The Turkey ARC data provides indicators of relative strength, and monetary values, for the degree of dispersion around commodity prices, generated through 30-day trading history between scrap, billet and rebar.
The degree over and below zero marks the commodity's price deviation from the 30-day and 60-day average price relationship for the three-product group.
