The difficulties observed on the supply side in the Turkish wire rod market have this week continued to be felt. The main problems faced by buyers with regard to wire rod supplies are as follows; some Turkish mills are unable to supply wire rod to the market due to overhauling works, while others continue to conclude sales from their stocks but are having problems satisfying demand for certain wire rod sizes; in addition, some Turkish mills' lead times for delivering orders are longer than expected. Meanwhile, late payments for finished steel sales have led end-users to slow down their wire rod purchases.
Construction activities have shown some slight improvements in the Turkish domestic market and this has caused some end-users to view the market situation in a more optimistic light. However, other end-users who think that the current activity is lower than expected, are maintaining a wait-and-see stance due to their greater pessimism.
As we look at the export situation, we mentioned in our analysis last week that Turkish mills were taking a great interest in developments in the Far Eastern market. In particular, a booking concluded by a Turkish mill to the Far East in the middle of last week resulted in an increase in the number of price inquiries made from that region to the Turkish mills. However, as regards bookings from Turkey to the Far East, it should be taken into consideration that high tonnage bookings will be preferred due to the freight cost advantage involved. It is heard that inquiries from the Far East have this week been made for low tonnage wire rod as well as other long products. Mesh quality wire rod export offers given from Turkey are mentioned in the range of $430-450/mt FOB, though this price level may show changes depending on the terms of orders.
On the other hand, it is observed that Spanish mills are having some difficulties in determining an offer level that will attract interest in the current situation of weak demand. This week in Spain, mesh quality wire rod offers are in the range of €340-350/mt delivered to customer, while offers below these levels for June shipments have been reported. Generally, whereas mills' stocks are at quite high levels, end-users' stocks are said to be below normal levels. The pessimistic atmosphere in the market has caused end-users to approach all offers with caution in the current situation.
Meanwhile, in the Saudi Arabian market, market players are happy to see that construction projects are progressing slowly but surely under the current circumstances. This week Saudi Arabian mills are offering thin size mesh quality wire rod at the levels of SAR 2,100-2,200/mt ex-works. Some end-users in this market foresee that wire rod prices may show further increases due to the optimistic mood in the market.
Turkish mills are currently giving wire rod offers to the Far East instead of the Middle Eastern and European countries where they have frequently concluded exports. This situation is one of the most important indicators of the contraction in the international wire rod market. Market players will wait with interest to see whether the wire rod markets will perform better in June as compared to May, which was a difficult month for these markets.