In-depth Analysis: Turkish Steel Mills' Price Hike Plan Stalls (January 7, 2026)

I. Core Background of the Event

1. Price Hike Initiators and Target Products

   Major electric arc furnace steel mills in Turkey (accounting for over 70% of the country's rebar production capacity) intended to raise the prices of rebar for both domestic sales and exports by $5 per ton, with the target export price set at approximately $520-525 per ton (FOB Turkey).
2. Rationale for Price Hike

   Turkish steel mills rely on imports for about 70% of their scrap steel supply. In early January 2026, the benchmark FOB price of HMS 1&2 (80:20) scrap steel stood at around $369 per ton, putting continuous pressure on production costs. Coupled with the volatility of the Turkish lira exchange rate, steel mills sought to maintain profit margins through price increases.
3. Current Market Situation

   In early January, the Turkish rebar market saw sluggish transactions. Domestic infrastructure and real estate demand recovered slowly, while the bargaining space for export markets (mainly the Middle East and North Africa) narrowed. Buyers maintained low inventory levels and adopted a wait-and-see attitude.

II. Four Core Reasons for the Failed Price Hike

1. Weak Demand Endows Buyers with Strong Bargaining Power

• Domestic Market: January marks the off-season for construction in Turkey, with progress on housing and infrastructure projects delayed. Terminal demand for rebar dropped by about 8%-10% year-on-year. Traders showed low purchasing willingness and refused to accept the price increase.
• Export Market: Infrastructure investment in key markets such as the Middle East and North Africa slowed down due to oil price fluctuations. Buyers shifted to cheaper sources from India, Russia and other countries, showing strong resistance to Turkey's price hike.
• Transaction Data: On the day of the planned price increase, spot transactions of Turkish rebar only reached 30% of the normal level. Both traders and terminal users focused on depleting existing inventories rather than replenishing stocks.

2. Insufficient Cost Support Undermines the Logic of Price Hike

• Although scrap steel prices remained firm, the growth rate was limited. In early January, the price of imported scrap steel in Turkey rose by only 1.9% month-on-month, far lower than the cost pass-through rate expected by steel mills.
• Impact of Substitute Raw Materials: Low-priced steel billets from China, Russia and other regions continued to flow into the Turkish market (still price-competitive even with a 22.5% import tariff). A price hike by local steel mills would further erode their domestic market share.

3. Double Pressure from Trade Barriers and External Competition

• Export Side: The US maintained a 50% Section 232 tariff on Turkish steel products. After the implementation of the EU CBAM, the carbon cost for Turkish steel exports to the EU reached approximately €150-160 per ton, already weakening price competitiveness. A further price increase would significantly reduce export space.
• Regional Competition: In the same period, India's rebar export quotation was around $510-515 per ton (FOB), $10 lower than Turkey's proposed price after the hike, prompting strong buyer inclination to switch sources.

4. Pessimistic Market Expectations Intensify Gameplay Mentality

• Traders and terminal users widely expected that Turkey's rebar demand would not recover substantially in January-February. With domestic steel mill capacity utilization rate at around 75%, the supply remained loose. Market participants believed the price hike lacked fundamental support and insisted on purchasing at the original price or delaying orders.
• Exchange Rate Volatility Risk: The continuous depreciation of the Turkish lira against the US dollar made buyers worried about further cost increases after the price hike, leading them to adopt a short-term wait-and-see stance.

III. Event Impacts and Future Trends

1. Steel Mill Level: In the short term, mills have been forced to abandon the price hike plan. They are alleviating cost pressure by cutting production (some mills reduced output by 10%-15%) and optimizing raw material structure (increasing the proportion of steel billets to replace scrap steel). It is expected that the rebar price will remain in the range of $515-520 per ton (FOB) before mid-January.
2. Regional Market Level: The failure of Turkey's price hike reinforced market expectations of "lingering low prices" for construction steel in Asia. The willingness of steel mills in India, Southeast Asia and other regions to raise prices has cooled down simultaneously, weakening regional price linkage.
3. Foreign Trade Pattern Level: Turkey's rebar export competitiveness will further decline. Buyers in the Middle East and North Africa will accelerate the shift to sources from India, China and other countries, potentially reducing Turkey's export share by 3%-5%.

IV. Implications for Steel Foreign Trade and Independent Station Operation