Steel producers in Turkey hope that a possible recovery in raw
material prices will trigger a similar uptick in the finished
steel market, if only in sentiment.
"The situation in the
market is critical," the International Rebar Exporters and
Producers Association (Irepas), an Istanbul-based industry
group, said in its June outlook. "The holiday season is ahead,
and there are no great expectations for the short and medium
term. That said, raw material prices are now very close to the
bottom and a possible rebound in the coming weeks would change
the mood in the long steel market."
The association said
that raw material prices nearing bottom is a "(ray) of light
for the long steel market."
A continuous decline
in prices of raw materials has led downstream consumers of
steel products to delay several purchase decisions, causing
apparent demand to fall, according to Irepas. In some markets,
such as Europe, this has put additional pressure on product
prices, it said.
"Demand seems to have
dried up almost completely in many regions, while stocks at
steel mills are quite high. The mills have been and are still
trying to adjust production, but apparently such efforts have
not been sufficiently significant in scale or consistent
enough, unlike the success of output adjustments at the end of
2008 and in early 2009, when the industry experienced a similar
negative business environment," the organization said.
"Consequently, there have been plenty of options for buyers in
the market lately. Under these circumstances, buyers are opting
to wait until the last minute before placing an order and, when
they do eventually order, the lead times are quite short and
transaction volumes are being kept as low as possible."
Irepas cited the
recent decline in the U.S. purchasing managers index to
less than 50 percent as one of the many negative economic
indicators in the market today (
amm.com, June 3).
demand in Turkey remains healthy, the uncertainty of
surrounding markets to which Turkey exports remains a concern.
However, one bright spot is a gradually improving market in
parts of the Middle East, where large infrastructure projects
are under way, the organization said.