<article><p class="lead">The spread between Turkish and Chinese steel rebar export prices narrowed in November, causing <i>Argus'</i> assessment for fob Turkey rebar actual weight basis to rise above its fob China rebar theoretical weight assessment yesterday.</p><p>The <i>Argus</i> fob Turkey steel rebar assessment reached $521.30/t yesterday, while the <i>Argus</i> fob China steel rebar assessment fell by $3/t today to $514/t, causing the Turkish price to trade at a premium to China for the first time since 29 April. The Chinese export price reached as high a spread over the Turkish price as $28.30/t in the first half of November.</p><p>Turkish steelmakers have sold large volumes of rebar to southeast Asia over the past three years as high Chinese domestic demand curbed exports from the country. </p><p>Strong Chinese domestic demand supports export rebar prices at a high enough premium over Turkey to ensure southeast Asia is a viable market for Turkish steel. </p><p>But a gradual fall in Chinese domestic demand and prices since the end of October coupled with Turkey's surge of export sales in November and a scrap import price increase has caused the spread between export prices from the two origins to narrow significantly.</p><p>Since 20 November, the <i>Argus</i> fob Turkey rebar assessment has increased by $27.50/t while the <i>Argus</i> Shanghai domestic rebar assessment has decreased by 130 yuan/t ($20/t) to Yn4,060/t ex-works.</p><p>Southeast Asian demand for Turkish product has diminished in the past 2-3 weeks on lower Chinese domestic rebar prices. But rising seaborne prices and limited supply have led to southeast Asian importers purchasing at least two other foreign cargoes during this period.</p><p>A Singapore trader suggested this week that Chinese domestic rebar prices could fall further to the extent that $530/t cfr Singapore on a theoretical weight basis would be a workable price for Chinese exporters. Turkey will probably lose its market share in southeast Asia in December if this occurs. </p><p>Turkish steelmakers' ability to drop export prices to compete with lower Chinese offers is limited by their high scrap costs, with the <i>Argus</i> daily HMS 1/2 80:20 cfr Turkey assessment reaching a 2020 high of $360/t yesterday. There is very little scope for downside to scrap prices next month as global supply is expected to be seasonally tight, accentuated by the strength of the US domestic market this week. </p><p>But Turkish mills widened their scrap-rebar margins on export and local steel sales in November, which gave them some room to sacrifice margins for sales in December, when their scrap-rebar price spreads often narrow. </p><p class="bylines">By Alex Reynolds</p></article>
