The shrinking of international demand has started to be felt also in the wire rod markets. This week in the local Turkish market, although purchases aimed at replenishing inventories have declined as the month comes to an end, the bargaining power of local buyers has increased considerably in line with mills' difficulties in exports. Also, the $/TRY exchange rate at the level of 1.45 is influential in determining Turkish domestic market sales prices.
With the price gap between the Iskenderun region of Turkey and the other regions of the country having narrowed, sales to the Iskenderun region from the other regions of Turkey are observed to have slowed down significantly. In the current period, due to the competitive local market prices, buyers appear not to hold a positive view of imports.
Looking at Turkey's export situation, eyes have turned to the Central African market as well as to the Central and South American markets as international wire rod demand shrinks. Turkish wire rod offers on FOB basis are reported to be standing at $590-600/mt FOB, whereas in sales to African markets it is possible to hear lower prices, taking into account freight rates and tonnages.
On the final product side, demand for products oriented towards the construction sector, such as steel mesh and nail, is observed to have been affected by the stagnancy in the Turkish domestic market. Even though the construction sector in the Iskenderun region is heard to have gained some momentum, it is not possible to describe demand there as being strong. Moreover, increases in shipping costs for steel mesh and nail sales to the Iranian and Iraqi markets cause difficulties for final product mills as regards exports.
In southern Europe, it is possible to say that wire rod prices have been changing in line with the scrap price trend, similar to the situation in Turkey. In the local Italian market, buyers' hesitation as regards purchases have caused inventory levels at the mills to increase, even though the mills are operating at low capacity utilization rates. It is heard that Italian mills are trying to tip the situation in their favor by giving competitive export offers, even if Turkish producers have gained an advantage, in sales to North Africa in particular, with the current €/$ exchange rate. Buyers who have postponed their purchases expect that prices may decrease further and are waiting for October pricing in Egypt.
Furthermore, with the economies of Ireland, Spain and Portugal giving negative signals and considering the weak economic data of the US, greater attention is now being paid to the developing countries. In the coming days, market observers will be watching to see what strategy wire rod producers will develop in the context of buyer hesitation.