After the increases seen in scrap prices, players in the local Turkish wire rod market are worried whether market prices will increase further. With the scrap price increases being directly reflected in production costs, Turkish mills have rapidly increased their wire rod export offers. The million dollar question is whether buyers in the international market will accept these new price levels as we approach August, especially given the weakness observed in international demand.
Wire rod buyers in Turkey have been evaluating import offers in order to compare with the price increases in the local market and have been surprised by the high levels given. Thus, ahead of the holidays, the high export offers from producers in the CIS and southern Europe for low and high carbon wire rods have lost their appeal for buyers in Turkey, also given the lead times involved.
Coming toward August, demand in the Middle East is not too active given the effects of the warm weather. Also, buyers in Europe have been hesitating to conclude new purchases before the holidays. Contrary to expectations, some mills in southern Europe have not halted production during summer, thereby creating the impression that competition between wire rod suppliers will continue, particularly in the North African market.
With weak signals about employment and housing loans coming from the US economy during July, market players are waiting for the US growth rate figures which are expected to be announced today, July 30. In the euro zone, after the completion of stress tests in the financial sector, the €/$ exchange rate has now reached the level of 1.30. On the other hand, this may be thought of creating a more favorable situation for Turkey as regards possible sales to North Africa. In Turkey, expectations of greater foreign currency liquidity by the end of the third quarter have been scaled back after the Turkish central bank's announcement of an increase in the foreign currency reserve ratio.
Although price inquiries via traders from South and Central America continue to be received by Turkish mills, the frequent updating of wire rod export offers creates an uncomfortable feeling on the buyers' side. Despite the price inquiries received from Sri Lanka and a few other countries, firm offers from buyers in the Far East are on the low side for the moment.
Observers will watch with interest to see how international wire rod market buyers will respond in the coming period to the sharp increases in Turkish mills' wire rod export offers.