This week, price levels have shown slight increases in the Turkish wire rod market. Varying their pricing policy compared to before, mills have this week been raising their prices at a more gradual rate, as end-users had failed to show the desired reaction to the more rapid price increases. End-users' greatest concern is whether these price increases will continue. The common view among Turkish market players is that all producers should continue to move in a determined way in order to ensure a stable rate of price increase. Even if just one single producer takes a backward step with regard to pricing, it could lead the wire rod market back down a slippery slope again.
Another factor that may support a stable price ascension in the Turkish wire rod market are the increased export bookings of the Turkish producers. Although there is some movement in terms of finished steel product sales in the Romanian market - one of the most important markets in which Turkish producers are interested - wire rod sales from Turkey to this country are reported to be stagnant. Meanwhile, Turkey is also registering finished steel demand from Libya and Afghanistan.
It is observed that this week SG2 (electrode) grade wire rod prices among producers have shown some variety in the Turkish domestic market. Some mills have been offering SG2 wire rod at a price level of $750/mt ex-works, excluding VAT, while some others, that have not focused much on production of this material, have been offering SG2 grade wire rod significantly above this level.
Rumors are circulating that some end-users have been delayed their purchases for a while, since their stocks for SG2 grade wire rod are still at high levels. On the import side, it is heard that offers for SG2 have been at the level of €650-680/mt ($887-928/mt) CFR Turkey for low tonnages and January shipment. However, end-users have not been inclined to accept these offer levels.
Mesh quality wire rod offers from Ukraine to Turkey have this week been standing at the level of $500-520/mt CFR Turkey for January shipments, indicating a slight increase. Generally, end-users have not been interested in import offer levels for all grades; however, it is heard that some end-users have made price inquiries for 1006 grade wire rod in southern Europe.
As regards producers, it is reported that some mills have concluded their February orders. The southern European wire rod market, one of the important export markets for Turkish mills, has been sluggish during the current week. It is said that the international wire rod market will gain shape and may then see a commencement of trading activities, following Italy's full return to the market as of Monday, January 12, 2009. However, it is certain that a general demand contraction will be felt in the wire rod markets for a while to come.
Looking at Turkey's export offers, it is heard that some Turkish mills have concluded a high tonnage booking of 5.5 mm 1006 grade wire rod to the Middle East at the level of $510/mt FOB Turkey for February shipment, and another booking to southern European for the same grade (but low tonnage) wire rod at the level of $480/mt FOB Turkey for January/ February shipments. It should be mentioned that export offers are expected to change depending on market dynamics in the coming week.