Overall semi-finished product and merchant bar prices had been in a somewhat stable situation for a couple of weeks before the 65 percent increase in the international iron ore price. European producers had increased merchant bar extras by €30 in the first days of February, and after that they further increased the extras by €25-30. It is expected that the merchant bar prices in Europe will once again enter an upward trend due to the following factors: namely, last week CIS billet prices increased to $700/mt FOB from $660/mt FOB, Turkish export billet prices rose to $730/mt FOB, and overall increases were also seen in other countries' export billet offers.
The cost of iron ore, the production of which is controlled by three or four companies across the world, increased significantly with the hike announced at the beginning of last week. Billet prices in the local Turkish market rose from $675-700/mt ex-works excluding VAT to $730-740/mt ex-works excluding VAT within the space of a week. On the other hand, the CIS billet price increased to $700/mt FOB, while it had been at $660/mt FOB in recent weeks. Looking at the international billet markets, it would be difficult to say that prices will not increase further. Initially billet prices were not expected to go up again and trading firms were anticipating price stability for March; however, they have since upgraded their expectations following the recent billet price increases of the mills. Meanwhile, China, once again, is disappearing from the international markets due to its rising costs, and the demand levels in the Middle East are continuing to move higher - these two factors signal that the prices will increase further.
In the Turkish market, last week's rapidly increasing billet prices have caused the merchant bar prices to rise as well. Turkish rolling mills, which last week had been finding it difficult to give a price, will revise their prices in line with the billet prices and will also reflect the increases in their prices, choosing levels liable to be accepted by the market and to bring profit. As soon as weather conditions favor construction activity in the local Turkish market, it is expected that the markets will awaken a little with the recommencement of unfinished projects or the starting up of new ones. Trading firms may decide their strategies according to the direction of the market, after their stocks have reached a certain level. Till then they are expected to speed up their purchases before prices go up further. Merchant bar prices in the local Turkish market were as follows last week: angles at TRY 965-990/mt, flat bars and square bars at TRY 970-1,010/mt, angles at TRY 970-1,020/mt, NPI-NPU at TRY 970-1,010/mt and 100-120 mm IPE at TRY 1,020-1,040/mt - all prices are ex-works, excluding VAT. However, the prices in question have started to trend up since the weekend and as of this week.
In the Turkish merchant bar export market, while Turkish exporters are finding it difficult to give a workable price level, it is heard that there are some sales being concluded for April shipments to the Middle East and the USA. The merchant bar export offers were as follows last week before the iron ore price influenced them: angles at $820-840/mt, flat bars at $830-850/mt, NPI-NPU at $830-850/mt and IPE-IPE AA at $890-910/mt - all prices are FOB and on actual weight basis. We will start to observe more clearly as of this week how the billet increase will affect production costs and how this will be reflected from the rolling mills to the end-users in billet, rebar and merchant bar.