Import wire rod offers for the US have increased by approximately $0.50 cwt. ($11 /mt or $10 /nt) in the past week as European and Turkish asking prices continue to rise.
Most import mesh quality rod offers for the US now range from $31.50 cwt. to $32.50 cwt. ($694 /mt to $717 /mt or $630 /nt to $650 /nt) FOB, loaded truck, in US Gulf ports while drawing quality offers range from $33.25 to $34.25 cwt. ($733 /mt to $755 /mt or $665 /nt to $685 /nt) FOB, loaded truck, in US Gulf ports.
There are no serious offers from China for the time being, since their strengthening home market and high ocean freight rates make most deals to the US unworkable. Chinese mills are either factoring the rumored export tax increase into their offers, or they are refraining from offering at all.
The absence of China should contribute further to the strength of the wire rod import market in the US since the already low number of import rods trickling into the country will be reduced even further.
But even though import prices are trending strongly up, wire rod buyers in the US are considering import offers again because of the limited domestic availability, as most domestic mills are booked solid through January. ArcelorMittal Georgetown is booked through February (though they will close temporarily in December for maintenance).
The domestic pricing trend is also strongly up, and it is expected that the domestic mills will soon announce a major price increase for January, possibly by the end of this week. And with shredded scrap prices rising approximately $35 /long ton in December, it is possible that mills could raise their wire rod prices for January by as much as that amount. Buyers say they definitely expect to see an increase of $20 /nt at the very minimum.
For now, most domestic low carbon rod offers continue to range from $30.50 cwt. to $31.50 cwt. ($672 /mt to $694 /mt or $610 /nt to $630 /nt) FOB mill, while high carbon offers range from $33.00 cwt. to $34.00 cwt. ($728 /mt to $750 /mt or $660 /nt to $680 /nt) FOB mill.
While both the domestic and import wire rod markets in the US continue to rally upward, it is important to note that actual demand for wire rod is still not particularly strong. However, even with the market seeing only moderate end-use demand, supplies are extremely tight and getting tighter as import tonnage continues to wane. It may be the case that in the first or second quarter of 2008, supplies will simply not be sufficient to meet the US demand.
Statistics from the US Import Administration show the continuing decrease of wire rod import arrivals to the US. In November, license data show that the US imported a total of 64,264 mt of wire rod, compared to 69,774 mt in October and 193,998 mt in November of 2006. Only 820.4 mt of November's import wire rod tonnage came from China, compared to 8,106 mt in October and 107,876 mt in November 2006. The US' main sources of import wire rod in November were: Canada, at 33,278 mt; Japan, at 10,638 mt; and Brazil, at 10,380 mt - all high carbon wire rod sources.