This week silence has continued to be observed in the Turkish domestic wire rod market. Although Egyptian mills announced new prices at the beginning of May, the anticipated response from the Egyptian end-users has not yet been seen in the intervening two weeks. This situation has caused Turkish producers to continue to focus on their local market where price levels are high compared to the international markets.
In the Turkish domestic wire rod market end-users have this week been in wait-and see mode as regards purchasing activity. Since mills located in Turkey's Marmara region are conducting overhauling work at their production lines and will halt their wire rod production for a certain time and focus on rebar production instead, wire rod users in this region will have certain difficulties in terms of obtaining supplies. Also, it is reported that another mill located in the southern region will not be able to supply wire rod to the market in the short term, since it is experiencing a technical problem at its wire rod production line and will have to halt production for a few days. End-users who need to deliver orders are expected to obtain wire rod supplies from other regions until such problems are resolved. In the coming week we will be better able to see the impact of the tightened wire rod supply on the demand side.
Many Turkish mills have filled their order books for May; however, it is hard to say the same for the whole month of June. Prompt shipment orders to Egypt have started to increase the stock levels of the end-users in this market, and so they have begun reconsider their import decisions.
The softening in wire rod prices in the Turkish domestic market as compared to last week has also affected export offers given by Turkish mills. This week export offers given by Turkish mills for mesh quality wire rod have decreased to the range of $460-480/mt FOB. Libya, Saudi Arabia, Dubai, Syria and Israel have maintained their popularity as export destinations for Turkish wire rod mills which are seeking alternative export markets to Egypt.
Looking at Italy, which is one of the major target export markets of Turkey, wire rod prices in this market have this week trended sideways, after the softening trend seen last week. The mesh grade wire rod price in the Italian market is at the average level of €350/mt, excluding VAT, while the drawing quality wire rod price is at €360/mt, excluding VAT. Silence has continued to be observed in terms of demand in the Italian market. Although it is heard that a few Turkish mills last week offered wire rod to Italy at the level of €370/mt CFR for June shipment, it is seen that Italian end-users have not been inclined to accept these offers, considering the current local market conditions and lead times.
In the Dutch market, another major export market for Turkey, the mesh quality wire rod price is still in the average range of €350-360/mt delivered to customer, excluding VAT. Stock levels have been trending at normal levels on the end-users' side, while it is reported that some activity has been observed in terms of demand levels due to the influence of the approaching summer season.
In the coming period market players will be watching with great interest to see when Egypt will recommence its purchasing activities and also to see which alternative export markets in the Middle East the Turkish mills will focus on in the meantime.