The course of the US rod market has changed dramatically in a short timespan, with offering prices for import rod dropping nearly 30 percent in the last two months. And Turkey, which had been by far the highest-priced import rod source for several months, is now the most competitive.
Import mesh-grade wire rod offers in the US from Turkey and China currently range from $44.25 cwt. to $45.25 cwt. ($976 /mt to $998 /mt or $885 /nt to $905 /nt) FOB loaded truck in US Gulf ports. These numbers haven't decreased further in the last week; however, when comparing them to their peak of $56.50 cwt. to $57.50 cwt. ($1,246 /mt to $1,268 /mt or $1,130 /nt to $1,150 /nt) in July (as reported by SteelOrbis on July 17), it is apparent how quickly and severely the market has weakened. Also, while China used to be the lowest price source, the most competitive offers are now from Turkey.
Turkey is able to offer at the lowest price now (at the lower end of the $44.25 to $45.25 cwt. range) because they are mostly scrap based, unlike the Chinese rods which are produced by integrated steelmaking from iron ore. The pricing trend for import rods is still down due to the weak US demand and aggressive price cutting from Turkish mills; however, there are now some Turkish tons being booked as some wire makers take advantage of the low-priced offers, anticipating that the market will have improved by the time the material arrives.
On the domestic side of the market, rod prices also continue to trend down, with Keystone reducing its price by $70 /nt ($77 /mt or $3.50 cwt.) effective September 15, matching the September/October price decrease that Nucor announced for rebar. However, ArcelorMittal has yet to announce any price decreases for rod, and Gerdau Ameristeel announced earlier this month it would keep prices for all products, including rod, unchanged through the end of the year, so it remains to be seen what the new domestic spot price will be. In a weak market, however, any announced price decrease is most likely be matched by competitors.
The most recent new offers from domestic mills were priced at $55.50 cwt. to $56.50 cwt. ($1,224 /mt to $1,248 /mt or $1,110 /nt to $1,130 nt) ex-mill for industrial quality low carbon and at around $58.00 cwt. to $59.00 cwt. ($1,279 /mt to $1,301 /mt or $1,160 /nt to $1,180 /nt) ex-mill for high carbon.
In other news, of course Hurricane Ike has been a big disruption this week, stalling wire drawers, traders and ports in Texas. The Port of Houston remains closed as of Wednesday due to an electricity shortage and, with the mandatory evacuation order still in effect in Beaumont, the extent to which production at Gerdau Ameristeel's Beaumont rod plant will be affected is as of yet unclear. However, any supply disruptions resulting from Ike are not expected to make a significant impact, as the demand from rod consumers in the region will also be temporarily reduced. It is possible that some of the import rods at the ports could be damaged as a result of the storm (at least that's what the traders are hoping) although there are not reports of this yet.