US wire rod offers inch up following scrap hike

US wire rod producers have announced a $3.25 cwt. ($72/mt or $65/nt) price hike for low carbon orders effective January 1, and although there are serious doubts as to whether customers will accept the increase in full, at least some of it is expected to go through.

Already, domestic low carbon spot offers for January shipment have moved up by approximately $1.00 cwt. ($22/mt or $20/nt) within the last week, since several producers, including Nucor and Keystone, announced they would  reflect the increase in December shredded scrap prices to January orders. Most offers now range from approximately $28.50 cwt. to $29.50 cwt. ($628/mt to $650/mt or $570/nt to $590/nt) ex-mill, and the price trend remains up as mills are still aiming to push through at least most of their announced increase. Still, the general consensus among buyers is that the full hike will not stick.

Although raw material costs are rising and customers' rod inventories have thinned out due to the deep cuts in domestic production this year, lack of competitive imports and general hesitancy of buyers to build inventories this year given the economic uncertainties, US demand for wire rod, on the whole, has yet to show any major improvements. Downstream activity in the wire market remains weak, especially for low-carbon, mesh-grade applications which are tied more closely to the construction market. Still, since there is less domestic production and more diversified applications, in comparison to rebar, the US wire rod market remains moderately stronger, with more modest price improvement  expected in the next couple weeks as buyers look to secure some tons for next year.

Meanwhile, the import price trend has switched to up since last week as well, as Turkish mills have raised their expectations in line with the US producers' January hikes. Still, import sales prices have not risen yet as mills and traders are still waiting to see where the US domestic prices will settle in at. In the meantime, traders are still trying to sell Turkish rod remains at a range of $26.00 cwt. to $27.00 cwt. ($573/mt to $595/mt or $520/nt to $540/nt) duty-paid, FOB loaded truck in US Gulf ports. China has remained largely out of the market in the past couple weeks as their offers are no longer competitive with Turkish offers.

Import data from the US DOC based on final year-to-date census information through October shows 532,045 mt of wire rod imported by the US in the first ten months of the year. This is down significantly from the 901,758 mt imported during the same period of 2008. In 2009 through October, the most import wire rod tons came from Canada, which accounted for 212,039 mt, followed by Turkey, with 73,135 mt; Japan, 46,943 mt; and Brazil, 46,668. Chinese rod imports this year have seen the most significant decline from last year compared to any other region, totaling only 7,538 mt in 2009, vs. 131,911 mt YTD October 2008.