As demand in the US wire rod market softens, domestic mills are trying to hold tight to current spot prices--with some success, for now.
According to several indicators, domestic demand for wire rod is waning--auto production has diminished in the US from both Japanese parts shortages and severe tornado storms in the Southeast last month. On the construction side, activity levels are still lackluster, leaving many wire mesh producers struggling. This combination of unfortunate outside forces has put significant pressure on the US wire rod market, and while prices have remained level since last week, there is much uncertainty as to how much longer mills can hold onto prices.
Spot prices for US domestic wire rod are still in the range of $37.50-$38.50 cwt. ($827-$849/mt or $750-$770/nt) ex-Midwest mill, and it is probable that mills will be able to keep prices at that level at least until scrap pricing is announced next month. Although SteelOrbis reported last week that several sources predict an uptrend in shredded scrap in June, many other sources say it is still too early to tell. If scrap does go up, there is a good possibility that domestic mills will try to raise prices on wire rod. However, the US wire rod market is relatively vulnerable right now, and if scrap stays neutral for yet another month--or goes down as a few industry insiders are now speculating--spot prices could very well slip.
Either way, import wire rod offers will likely have little effect on the US market if import prices continue to hover so close to domestic offerings. Currently, Turkish wire rod offers are in the range of $37.00-$38.00 cwt. ($816-$838/mt or $740-$760/nt) duty paid FOB loaded truck in US Gulf ports, reflecting no change from last week. SteelOrbis has learned, however, that very few orders are being placed at this level, and Turkish mills might consider softening their offers somewhat if the US market remains indifferent.