With the expected scrap increase announcement only a week or so away, wire rod prices have yet to firm up to mill expectations.
US wire rod buyers are not desperate for product, but they don't have overflowing inventories, either, putting them in a better position to negotiate with domestic mills. Although asking prices are still in the range of $31.50-$32.50 cwt. ($683-$717/mt or $630-$650/nt) ex-mill, some spot offers were heard in the last week for about $0.50 cwt. ($11/mt or $10/nt) less. Wire rod buyers' reluctance to pay the full price increase for August might influence how mills respond to the expected shredded scrap increase in September. Many in the industry believe that mills will absorb some of the scrap increase-but not all of it, still trying to push for some sort of transaction price increase. But time will tell how successful they will be, if they are successful at all.
One of the end-use sectors that continues to stabilize the domestic wire rod market is the appliance industry, which has not experienced the same post-rebate slump as the housing market did after the tax credit program expired. According to Appliance Magazine, shipments of garbage disposers and refrigerators were up 8.4 percent and 11.8 percent (respectively) in July compared to the year before. Overall, annual appliance sales for 2010 are expected to reach 5 million units, in line with the annual sales average of 4.9 million over the last 20 years.
Despite the stability of wire rod demand, many end-users are continuing to stick with domestic rod over imports as long as prices are uncertain. Currently, Turkish wire rod offers are not distant enough from domestic offers to be attractive. Prices have not changed last week, still in the range of $29.50-$30.50 cwt. ($650-$672/mt or $590-$610/nt) duty paid, FOB loaded truck in US Gulf ports.