Approaching the end of September, the price increases expected in the wire rod market after the end-of-Ramadan holiday have not yet occurred due to the weak trend of demand. With buyers' negative response to the mills' sales price offers and the weakening of final product (steel mesh, nail) demand in the international market, negotiations have entered a difficult period. Moreover, in the international markets, the decisions of central banks to protect their economies are making their impact felt in all sectors. For instance, although US pressure continues for the appreciation of the Chinese currency, China is resisting this pressure in order to protect its local economy.
Meanwhile, following the US Federal Reserve's announcement that it will pump more new US dollars into the economy, the euro/dollar exchange rate began to see levels of around 1.32 and above. Even if this situation causes Turkish producers to gain an advantage against their European peers, contracting demand curbs usage of this advantage. The slow change in the price of Brent oil strengthens the view that foreign capital prefers equity securities and the commodity markets, which are seen as safe ports, instead of tending to invest in dollars. In the Turkish domestic market, these developments have resulted in the strengthening of the Turkish lira against the US dollar.
Looking at the Middle East markets, the majority of buyers in Saudi Arabia and Dubai continue to supply their needs from their domestic markets, while buyers in Egypt are abstaining from purchases given the continuous changes in wire rod export offers.
In Europe, the price uptrend in export offers after the summer holiday period appears to have slowed to some extent in line with declining international demand. This week, offers given from southern Europe to Turkey for mesh quality wire rod at the level of €490-500/mt CIF Turkey have not yet found acceptance.
The situation is similar in the local Turkish market. Recently, there have been good possibilities for negotiations for actual buyers, while a significant number of buyers are postponing their purchases considering that prices may soften further.
Buyers in the US market continue to hesitate as regards new purchases. In the coming days market observers will be watching to see what strategy wire rod suppliers and final product (steel mesh, nail) manufacturers will develop in the context of buyer hesitation.