This week a supply shortage has continued to be seen in the Turkish wire rod market. Since mills located in Turkey's Marmara region have not offered wire rod to the market, buyers in this region have had to obtain wire rod supplies from other regions instead. Meanwhile, mills located in other regions have continued to increase their sales prices, in consideration of the cutbacks in their own outputs and the pressure buyers are under to purchase in order to deliver orders.
On the export side, Turkish mills have continued to deliver wire rod to the Middle Eastern market. We mentioned in our last analysis that Turkish mills had been offering wire rod to the Middle East in a price range of $490-500/mt FOB. This week, they have tried to make other export markets accept these price levels; however, it seems difficult for the European and Bulgarian markets to accept these offers, given that their local prices are low compared to the international markets.
As we examine the southern European market, a positive atmosphere has continued to be seen in Italy. In this market, local wire rod prices have continued to increase by the weekly margin of €10-20/mt. The main factors contributing to this increase are; the global scrap prices, the production cutbacks in Italy, and also the upward pressure applied by the Turkish mills in the international markets. This week in the Italian domestic market drawing quality wire rod prices are in the range of €360-370/mt delivered to customer, excluding VAT. Meanwhile, demand in this country has been moving on a slack trend.
Staying in southern Europe, in Spain the wire rod market has this week registered a similar increasing trend to that seen in Italy. It should be mentioned that this price increase is based on supply rather than on demand. Reduced production outputs, buyers' very low stock levels, and the feeling that market prices may be at bottom levels - all these factors have contributed to the increase. Meanwhile, sluggishness continues in the construction sector. In the local Spanish market it is expected that drawing quality wire rod prices may show a gradual increase in the coming days, from the current levels of €340-350/mt delivered to customer, excluding VAT. However, it is not possible to talk about a long-term recovery for the time being.
Although, it is said that ex-Russia wire rod offers are this week in the range of $450-460/mt FOB, it is also heard that offers have been given below these levels for May shipments to markets where local price levels are low compared to international levels, i.e. the northern European markets.
In the coming days we will see more clearly whether the activity in southern Europe will have a knock-on effect on the other European countries.