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Turkish mills consider long product output cuts in June - 21 May 2012

Turkish steel producers are considering making cutbacks in production for June as demand for rebar remained slow last week, but prices for scrap continued to pressurize margins and only suggested falls towards the end of the week, market participants told Platts Steel Business Briefing on Friday.

While no mill contacted by Platts SBB would admit that shifts would be reduced, one export manager failed to state that production capacity would remain at 100% in the coming month, going on sales made until now. Other market participants were more forthcoming.

"Producers are now considering cutting one shift/day for June as neither domestic rebar sales nor exports are really going well," one trader said. "I am sure the mills will slow down [in June] and maybe work fewer shifts: the local market sales people I talk to today are not willing to sell rebar [because of low prices]," a rebar export trader said.

Another trader of billet and scrap reported some producers are currently only working 10-days on, 10-days off in terms of output, but few others concurred, believing that producers are debating whether to shut down some capacity for the next month.

The issue is partially linked to scrap availability, too: those mills who have yet to pick up June deliveries are now facing extremely limited lead times, which inherently reduces their buying options. "In the next 15-20 days scrap buying will be very tight in terms of shipments; at the same time, rebar sales aren't going well for June and we've only seen one significantly lower deep-sea scrap sale," a fourth trader said.


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