The recent bookings of hot rolled coil from China have prompted some Turkish buyers to consider purchasing from domestic mills as well this week, market participants inform Kallanish.

While this uptick in activity has contributed to stimulating deals to some extent, it has not been able to support the country's overall demand and prices.

This is due to the ongoing issue of domestic steel consumption remaining insufficient amid an import influx and limited export sales. As a result, domestic producers have to reduce prices, while some have opted to reduce production or prioritise maintenance activity to support prices.

After bidding for over two weeks at around $550/tonne cfr, following a rebound on the Shanghai Futures Exchange, Turkish buyers secured significant HRC volumes from China at around $555/t cfr Turkey on Tuesday.

Notably, the availability of $555/t cfr was only for large quantities. Traders were reported also trying to add to the two vessels booked, offering smaller volumes at $565-575/t cfr.

Due to the typical application of a roughly 15% markup to China-origin HRC cfr prices to establish domestic HRC prices in Turkey, Turkish domestic mills were insisting on $650/t ex-works, resisting bids at $630/t ex-works.

Turkish domestic mills were able to offer May shipments and, in one producer's case, even April shipment. Meanwhile, China-origin HRC was scheduled for May shipment and June arrival. Some market participants foresee delays in arrivals potentially extending to July due to constraints in the Red Sea.

This delay could be advantageous for domestic mills, aiding in their efforts to sustain prices at $650/t ex-works.

Turkey's mills refrained from exports, as buyers in Italy and Spain insisted on prices of around €600/t cfr ($652), which Turkish mills were unable to meet. They cited that even higher domestic levels were below their cost of production, and export prices could not cover the cost of importing slab from Asia.

Market participants anticipate that May shipments from domestic mills will be finalised before 5 April, coinciding with buyers leaving for the Eid holiday. Additionally, some participants expect activity following the municipal elections on 31 March.

Just ten days before nationwide local elections, Turkey's central bank implemented an unexpected increase in interest rates by 500 basis points to 50% on Thursday. This decision was attributed to a deteriorating inflation outlook, with a pledge to tighten further if significant and persistent inflation is anticipated. In response, the lira rallied by as much as 1.5% to 31.91 against the dollar, reversing weeks of steady declines. However, the impact of the rate increase on steel trade was limited.

Source: Kallanish market survey