As wire rod prices in the Turkish domestic market have started to undergo very frequent revision of late, buyers in this market prefer to wait and see until prices settle at a certain range before they conclude any bookings.
The fast rise observed in wire rods, the cost of which is one of the most important factors to be considered when determining the sales price of final products, is causing trouble currently both for domestic market and export market pricing for final products. Reflecting this input cost increase in orders received prior to the wire rod price hike is creating difficulty for wire producers.
In addition to the rising prices, welded wire mesh/nail producers in the south of Turkey are also facing problems as the quantities delivered are also limited. This causes delays in deliveries of final product orders. Particularly, last week availability of galvanized wire in the region was very tight, due to increased exports.
The negative impact of winter weather conditions heading towards mid-March is seen on construction projects. This can be observed particularly in demand for wire mesh and mesh quality wire rod. Most of the wire rod market players indicate that the increase is rather due to the raw material price hikes instead of strong demand. A couple of them, meanwhile, argue that the prices may be corrected if competitive import prices start to dominate the domestic market.
In southern Europe, rainy weather has long been slowing down construction activity and so has continued to keep demand in a weak state. When compared to the international wire rod market, Turkish producers' offers remain higher than export offers from most other countries with a couple of exceptions, and therefore the chances of sales to Europe are not high in view of the weak demand there.
Exports from Turkey to the Middle East and Africa seem to be in greater focus in this period. Players in the Far East are making firm bids at very low numbers. From the south of Turkey, markets such as Iran, Iraq, Syria and Libya are workable for both wire rod and further processed final products. The exhibition in Iraq this week has also helped strengthen trade ties in this respect.
The uncertainty surrounding the IMF-Turkey relationship, the barrel price of Brent oil floating at $80, and the fluctuating $/TL exchange rate are also factors which add to the difficulty of make any concrete forecasts - in addition to narrowing domestic demand and strong raw material prices.