Wire rod buyers keep purchases on hold in second half of August

Thursday, 18 August 2011 16:51:18 (GMT+3)   |  
       

In the Turkish domestic market, demand for final products such as wire mesh, nails and wire is remarkably slow, and so is wire rod purchasing activity. The fluctuations in the dollar/Turkish lira exchange rate are making it difficult for final product producers to calculate their production costs and reduce their competitiveness in the foreign markets. Therefore, final product producers that have to produce for orders in the Turkish domestic market continue their purchases, while the remaining producers are preferring to delay new buying activity and maintain moderate inventory levels.
 
On the other hand, those willing to import wire rod from Europe and the CIS due to the inconsistent pricing in the Turkish domestic wire rod market are having trouble in obtaining offers from Europe, and from Italy in particular.  SteelOrbis has learned that Spanish producers that have kept shorter maintenance or stoppage periods than the Italian mills are offering mesh making grade wire rods at €520-525/mt FOB for late September/October shipments.
 
In the Far East, we see prices in Vietnam following a sideways movement. The domestic wire rod price level in Vietnam is at VDN 16.1 million/mt ($775/mt) ex-works level, including all taxes. Last week's expectations for an attempt by producers for an increase seem to have been disappointed for the time being due to the lack of demand in the market.
 
In India, demand continues to remain slow similar to the Sri Lankan market. In our analyses in the previous weeks, we mentioned that Sri Lankan buyers opted for Indian offers instead of Turkish wire rod, in respect of freight advantage and competitive pricing. This situation is still valid. Similarly, domestic producers in India are offering competitive prices for firm buyers. In line with this fact, offers of drawing quality wire rod given from Turkey to India are currently not favored at $815-820/mt CFR on actual weight basis for September shipment.
 
As we have finished the first half of August, the international wire rod market seems to be rather active in Latin America and in West and Central Africa with some buying activity observed, while new orders in Europe, the Middle East and Turkey may be delayed until September.
 


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