This week, signs of softening have been observed in wire rod price levels in the Turkish domestic market. Also, the Turkish mills who had not been able to achieve their pricing goals in the international market, have this week been obliged to revise their export offers. Meanwhile, the domestic market has been characterized by silence with regard to demand from end-users. The end-users who have to deliver orders continue to purchase just to meet their requirements, while firms facing stagnation in sales of finished goods continue to delay their purchases. Meanwhile, it is unlikely that the end-users whose stocks are at high levels will consider purchasing in the long term. This week, on the import side it is heard that the wide-ranging prices of export offers given by Chinese mills for electrode quality (S1) wire rod have not attracted interest due to long lead times and the buoyant price levels in the Turkish domestic market.
On the other hand, it is heard that some Turkish mills are maintaining exports to current markets, while some of them have been considering redirecting to their old export markets. Although the wire rod export price level given by the Turkish mills is at $500/mt FOB, it is heard that some mills have given offers to the international markets at below this level. In general, rumors are circulating that some mills in the international markets are likely to suspend their production in December.
It is heard that one of the markets where domestic steelmakers are due to suspend production is the Bulgarian market. Mesh quality wire rod, which at the beginning of this week stood at the level of BGN 900/mt ($592/mt) ex-works excluding VAT, has decreased to levels of BGN 820-850/mt ($539-559/mt) ex-works excluding VAT at the end of the week. It is reported that some of the large mills in this country will suspend their production in December. The Bulgarian domestic market, with its quite low end-user demand, is likely to maintain its decreasing trend for a while.
Meanwhile, similar reports are coming from Spain concerning possible production halts by mills in December. In the stagnant Spanish domestic market, mesh quality wire rod is at the level of €350-360/mt ($450-463/mt) for delivery to customer. Offers given by some Turkish mills to Spain are standing at €370/mt ($476/mt) for delivery to warehouse and for end of December shipments. Also, it is heard that export offers from China to Spain for boron-added mesh quality wire rod are at the level of €340/mt ($537/mt) CFR Spain. End-users, who have no intention of purchasing in the current period, have not leant towards these offers.
Moving to Dubai's domestic market, the pessimistic atmosphere as regards wire rod still prevails. It is heard that prices of mesh quality wire rod are in a range of $470-490/mt ex-works in the local market. Some end-users report that export offers from China to Dubai for 6.5 mm boron-added mesh quality wire rod are at the level of $520-530/mt CFR Dubai for December shipments. As end-users have not been able to melt their abundant stocks, they have not been attracted by these offers.
In addition, it is heard that export offers have this week become frequent in the Romanian market. As we stated earlier, the Turkish mills have revised their export levels, with some mills reducing their offers below the level of $500/mt FOB. It is heard that some Turkish mills have been offering mesh quality wire rod to this country at the level of $480/mt CFR Romania for December shipments; while the average price level of the same quality wire rod is at €380/mt ($489/mt) ex-works excluding VAT in the Romanian domestic market. Also, offers from Moldova to Romania are at the level of $480/mt DAF Romania. In the coming days we will be better able to see whether the export offers close to the domestic levels will gain acceptance.
In conclusion, in the days to come we will observe how the mills will act to convert the Turkish domestic market, which has started to be seen by some as a "buyers' market", back to being a "seller's market". In addition, we will wait and see whether the weak demand seen in the Turkish domestic market will show an improvement by the religious holiday in December, as well as what kind of a strategy will be determined by end-users to boost up finished steel sales in December, which is expected to be a stagnant month due to the long holiday season.