The dust is still settling in the US wire rod market following domestic producers' price hikes announced earlier this month, as raw material costs are still trending slightly up but demand is still decidedly weak.
Most US domestic low carbon wire rod spot offers continue to range from approximately $27.00 cwt. to $28.00 cwt. ($595 /mt to $617 /mt or $540 /nt to $560 /nt) ex-mill; however, buyers comment that there are some deals taking place at slightly below this price level and others concluded at a higher price level, based on region and customer. The typical price spread is wider than usual, as some mills are still cutting deals for large tonnage, while others in more isolated markets like the West Coast, are able to command much higher prices.
Overall, the pricing trend for US wire rod is still slightly up, as most mills have yet to reflect the full rise in raw material costs into their sales prices, and it looks like US cut grade scrap prices may increase slightly further in August. Demand for wire rod is still poor, but the outlook has improved slightly in the last couple months on signs that the economy is starting to turn around. Furthermore, the lack of imports, and closure of two major wire rod production facilities on the East Coast (Gerdau Ameristeel's Perth Amboy, New Jersey mill and ArcelorMittal's Georgetown, South Carolina mill), the domestic supply lines are tightening.
On the import side, the mood is also slightly up, with mesh quality offers from Turkey still ranging from approximately $25.00 cwt. to $26.00 cwt. ($551 /mt to $573 /mt or $500 /nt to $520 /nt) duty-paid, FOB loaded truck in US Gulf ports.
Turkish mills are still not getting many US orders, as the prices are not very attractive compared to domestic, but some customers, particularly on the East Coast, are starting to get nervous about their future supplies and are starting to look at imports again with an eye to purchase some import tons before the market tightens further and prices escalate. Traders say that a few fixtures have been made from Turkey to the East Coast recently at the abovementioned price level.
Still, similar to the US mills, despite rising local scrap prices, Turkish longs mills aren't seeing very strong business overall, so it remains to be seen whether they will be able to get enough orders to keep inching prices up, especially with the approach of Ramadan and the European summer holiday season.
Meanwhile, there are very few wire rod offers to the US from other offshore sources, except for a few scattered offers from Europe which are at about the same price level as the Turkish offers. The nation which used to be the US' largest offshore low carbon rod source, China, remains absent from the US market, as its domestic market continues to rise above and beyond US price levels.
Census and license data collected by the US Steel Import Monitoring and Analysis (SIMA) system show that wire rod imports increased from 25,390 mt in May to approximately 43,388 mt in June, June wire rod imports still remained well below the 107,118 mt figure for June of 2008. The top import rod sources in June 2009 were: Canada (19,990 mt), Venezuela (10,425 mt), the United Kingdom (3,730 mt), Japan (3,022 mt), Brazil (3,010 mt). It is noted, however, that license data collected through July 21 shows that rod imports from all of these sources is significantly down in July, with both Venezuela and Brazil dropping off the radar altogether this month.