The Turkish wire rod market has been characterized by inactivity this week. With the holidays starting in Europe, Turkish wire rod market players are now waiting for Europe's return to the market. Although the length of the holidays in Europe varies depending on the different countries, most countries will return to work as of January 5, 2009 (except Italy which will return as of January 12, 2009).
The main problem observed in the Turkish wire rod market this week has been the decline of finished steel demand in Europe due to the holidays. Sluggishness in the finished steel markets has been triggering the slowness in wire rod demand. Also, as they prepare their balance sheets for the end of the quarter, it is said that some end-users are currently holding on to their cash despite the decline in their stock levels and that they are delaying their new purchases until the post-holiday period. Meanwhile, the end-users that previously agreed orders have been trying to deliver these orders in time and so have been maintaining their wire rod purchases.
On the Turkish producers' side, it is reported that some producers are waiting for Europe to return from holidays on January 5, while other producers are seeking to gain some freight advantages for exports to certain markets.
On the other hand, the positive mood in Saudi Arabia is still in evidence. It is reported that there is still demand for Turkish wire rods from this country and that this week there have been some deals at similar price levels to those we reported last week - i.e. at $550/mt CFR Saudi Arabia for 1006 grade. It is also heard that some end-users in Saudi Arabia have this week inquired about the prices of high carbon wire rod with a view to purchasing from Turkey.
Early this week the price level of 1008 grade wire rod in Bulgaria's domestic market was still at BGN 800/mt ($576/mt) ex-works and this market has continued to be characterized by a pessimistic mood in the lead-up to the New Year.
Meanwhile, 1008 grade wire rod price levels in Spain were at €380-400/mt ($535-563/mt) delivered to customer in the early days of the week, whereas the price levels for 1006 grade were at the average range of €420-430/mt ($591-605/mt) delivered to customer. It is heard that some end-users from Turkey have considered imports from this country. However, their approach has not been met by acceptance from the Spanish side as the offers levels in question were considered to be low.
If a reawakening is seen in finished steel demand, the Turkish wire rod market may gain some momentum. It is thought that Europe's return is the main prerequisite for such a reawakening. The European wire rod markets entered their holidays at higher price levels compared to international prices. If Europe maintains this advantage, the expectation of an awakening of the Turkish wire rod market may indeed occur. However, until Europe's return to the market, it would seem that the best strategy to be followed by Turkish wire rod market players should be to avail of every opportunity to export and thereby get through this quiet period having incurred minimum damage.