A strong rising movement has been observed in the Italian domestic wire rod market in the early part of May. Wire rod quotations are continually being adjusted in an upward direction. Indeed, in recent days prices have literally shot up, driven by the soaring raw material costs and the shortage of products in the market.
In particular, the high prices of scrap (strong increases were seen last week and this trend is still continuing) are having serious consequences for the prices of semis and finished products. Billet prices have reached €700/mt delivered to buyer. Semis from Ukraine and Russia are being sold in Italy at €680/mt CIF, increasing to €720/mt CIF for semis imported from Turkey. These prices are being reflected in the finished product price levels which are reaching historical levels.
Exacerbating this situation are the shortages of material observed in the wire rod market. Currently, there are very few wire rod products to be found on account of the significant quantities being exported by producers. There have also been few arrivals from abroad, in particular from China, due to the effect of official Chinese policies, and also due to the Chinese holidays at the start of May.
All these factors have caused wire rod prices to spiral upward. Quotations of welded mesh wire rods in Italy are around €800/mt delivered to buyer while drawing quality wire rod is in a range of €820-830/mt. As regards import material, Chinese mesh quality wire rod is being sold in Italy at €700/mt CIF, for end of July shipment. The same material coming from Turkey is priced even higher at €740/mt CIF for July shipment, while the price of material from Eastern Europe is higher still, at €770-780/mt CIF for July shipment.
Demand levels are in line with the norms for the time of the year. There is decent demand from traders though generally they tend to avoid buying in large quantities, but instead keep their stocks at medium-to-low levels. End-users are buying the bare minimum amounts of products needed since, on the one hand, they fear that price levels could recede rapidly, and, on the other hand, given their tight financial situation. Many end-users are in a state of near bankruptcy due to the strictness of the banks on the issue of giving credit and also due to the increase in interest rates.
As regards the coming period, players in Italy's wire rod market believe that the current rising trend will not undergo any change at least until the month of September. The fourth quarter is already being awaited with great interest.