US wire rod prices have remained stable since last week, though with import prices still trending down and US scrap prices projected to take another hit in November, domestic rod is coming under pressure.
Most low carbon rod offers from US mills continue to range from approximately $28.50 cwt. to $29.50 cwt. ($628/mt to $650/mt or $570/nt to $590/nt) ex-mill. Overall demand in the market remains weak, so much so that ArcelorMittal has reportedly informed the union representing its Georgetown, South Carolina wire rod mill, which has been idled since July, that it will likely keep the mill closed through all of next year as well. This did not come as a big surprise, but it is a sad reminder that even with significant production capacity taken out of the US rod market this year, including, in addition to Georgetown, the idle Gerdau Ameristeel’s Perth Amboy, New Jersey mill, there is still not enough demand in the market for the US rod producers to start thinking about bringing back any shuttered capacities.
The general pricing trend for US wire rod remains slightly down as demand is soft, imports continue to get more competitive and US shredded scrap prices are poised to fall by at least $30/long ton next month, according to market sources.
Since last week, Turkish rod offers for the US have weakened further, with sales prices falling by approximately $0.50 cwt. ($11/mt or $10/nt) across the board within the last seven days. Most mesh-quality Turkish rod offers for the US now range from approximately $25.50 cwt. to $26.50 cwt. ($562/mt to $584/mt or $510/nt to $530/nt) duty-paid, FOB loaded truck in US Gulf ports. Chinese offers of mesh-quality (boron-added) rod for the US are still a bit more competitive than their Turkish counterparts, with most offers 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. Traders say that there is some interest in Chinese offers but no major known bookings yet.
Import rod offer prices for the US are also still trending slightly down, similar to domestic offers, due to falling raw material costs and weak international demand. Turkish offers in particular will likely have to decline further in order to compete with the Chinese offers now in the market. Still, there are some encouraging signs that conditions in the international wire rod market may be close to bottoming out. Turkish longs producers have recently been getting more inquiries for wire rod exports to North Africa, and Chinese domestic wire rod prices have made some slight gains in the last week while inventories of wire rod in China decreased substantially during the same period. On the other hand, overall demand for both Turkish and Chinese wire rod exports remains weak, and along with the falling raw material prices, there is probably still a bit more room for international wire rod offer levels to fall before the market reaches a firm bottom.
Significantly, the US has seen a sharp increase in Turkish rod imports this month, pushing overall import rod volumes to their highest monthly total of the year. US import license data collected through October 27 show a total of 92,532 mt of wire rod tons this month, up from 70,224 mt in September (based on preliminary September census data) and compared to 106,175 mt in October 2008. The last month in which US wire rod imports exceeded the October 2009 license level was in December 2008. While tonnage from most sources in October actually decreased and Chinese tonnage remained well under 1,000 mt, Turkish rod imports in October so far, based on the license data, have amounted to 39,124 mt, their highest level in over a year.
Nevertheless, while US producers may find the October import spike somewhat alarming, import levels generally trend down in November and December, and there have been few if any bookings of Turkish rod taking place within the last several weeks, which means there will be very little Turkish material arriving in the coming months. Still, if China bookings start to pick up during this same timeframe, there is a chance that rod import volumes could see another spike in January.
Other smaller import sources in October (based on the license data collected through October 27) include: Canada, with 23,808 mt; Italy (11,164 mt); Brazil (4,792 mt) and Japan (3,842 mt).