LONDON, May 21 (Reuters) - Steel billet prices in Turkey and the Black Sea have extended losses this week as the buyers remained on the sidelines, betting on lower prices as euro zone debt worries spooked both investors and physical traders.
A fall in the prices of key steelmaking ingredients such as iron ore and scrap coupled with a decline in Chinese steel prices have also weighed on the steel price, which has fallen 24 percent since hitting around $650 a tonne in mid-April.
Anticipated monetary tightening in the world''s top steel consumer China was another reason consumers chose to remain on the sidelines.
Traders quoted Black Sea free-on-board (fob) billet between $490-520 a tonne, compared with $530-540 a tonne last week. On LME, three-month Mediterreanan billet drifted lower to $419 a tonne earlier this week, its lowest since February 2, before trading at $429 a tonne on Friday.
''I think prices are coming down on the back of buyers'' hesitancy in a falling market,'' a UK-based steel trader said. ''I''d say it''s mostly sentiment related,'' he said.
Commodity markets as well as equities have taken a beating recently on the back of mounting debt worries in the eurozone, which is facing austerity measures that could curb growth and therefore demand for metals and steel.
Traders and stockists have bought heavily over the past couple of months as they came back to the market to replenish inventories run down in the face of recession, pushing prices from around $400 a tonne to $650 a tonne in the previous weeks.
But buying has lost momentum since end-April, partly due to fears tightening measures in China, the world''s top steel producer, will cool down the economy, hitting the steel demand.
''There are enormous quantities being offered...customers are in full panic with prices getting lower every day and it''s not dropping by $5, it''s dropping by $20-25 a tonne,'' another UK-based steel trader said.
Chinese steel prices dipped again this week with traders and mills backing away amid concerns about further ore price hikes in the second half of the year and government measures to curb a real estate bubble.
The fall is partly due to the decline in raw materials such as iron ore, traders say. Asian iron ore prices slumped 10 percent from last week despite a cyclone threatening delays in shipments was bearing down near India''s east coast, iron ore mining hub.
But on outlook for later this year, analysts kept their upbeat tone on the outlook for the steel demand.
''We see no reason to forecast any significant falls in apparent steel demand in coming quarters due to i) already low inventory levels and ii) improving end user demand, evidenced by expansionary EU PMI rates,'' analysts at Credit Suisse said.
Global crude steel output jumped by 31.8 percent year-on-year in the first four months of the year to 467.8 million tonnes, a figure analysts say hits a record high at 1.48 billion tonnes when annualised.