Wire rod market continues to rally in Europe

The global wire rod market is experiencing a good 2007 so far, in contrast to 2006. Turkish producers are offering mesh quality wire rods for export at $605-610/mt FOB. Drawing quality wire rod prices are around $20/mt higher than these prices. The increase in scrap prices together with the upturn in the European domestic market are contributing to a strengthening of the wire rod market. Furthermore, the cancellations and delays in some latest bookings concluded from China and the price increases (offers of $490/mt FOB levels are being heard) are supporting the market pick up. Most exporters in China are making agreements to share VAT rebate cancellation costs with buyers. Egyptian origin wire rod is experiencing difficulty in the international markets in parallel with the problem in the rebar market (fixed domestic rebar prices and the new export tax). Consequently, the countries which have been importing from Egypt are now switching to alternative suppliers such as Turkey, Ukraine and China. The price level of mesh quality wire rod in the local Italian market is at €470-480/mt, while the price level of drawing quality wire rod in the local Italian market is at around €520/mt, delivered to customers' premises. Market players expect that the Italian wire rod market will improve in the coming period due to the increase trend in the global market. Ukrainian wire rod prices have been hiked for April production as expected. Mesh quality wire rod prices have increased from $500/mt FOB in February to $550/mt at the beginning of March. Furthermore, according to reports, drawing quality wire rod has been sold to Romania at €465/mt DAF. So all indications are that wire rod has made a good start to 2007. The strong European market, the rising trend in the Russian market and the expectations of a cancellation of the Chinese VAT rebate are helping prices increase further.