US rod mills have adjusted their prices further downward since last week; however, they have yet to attract a substantial amount of new orders.
Domestic rod mills are still looking for orders for December and January. It is almost certain that mills will have to lower their offering prices even further in order to fill their books for the rest of the year.
Currently, most domestic, low carbon wire rod offers range from $41.00 cwt. to $42.00 cwt. ($904 /mt to $926 /mt or $820 /nt to $840 /nt) ex-mill, representing a substantial decrease of about $4.00 cwt. ($88 /mt or $80 /nt) since last week. However, the ongoing fall of import rod prices as well as further price drops in the scrap market will likely continue to push domestic rod numbers even lower.
Import offers for mesh-quality rod have also fallen since last week, with most offers dropping by approximately $5.00 cwt. ($110 /mt or $100 /nt), to a new range of $27.00 cwt. to $28.00 cwt. ($595 /mt to $617 /mt or $540 /nt to $560 /nt) duty-paid, FOB loaded truck, in US Gulf ports. Most new import offers are still originating from China and, primarily, Turkey.
Offers from foreign mills have fallen rapidly in recent weeks, but traders are doing what they can to soften the price decreases. One Gulf-area longs trader told SteelOrbis this week, "All traders still have some unsold positions coming in, and no one wants to bring the market down too far."
The bottom of the market may be in sight, however. Turkish mills are reportedly trying to hold the line on prices, claiming a slight increase in the price of scrap. While this scrap price rise may just be wishful thinking on the part of the Turkish mills, it is still a positive sign that the producers are trying to put an end to the price decay.
Chinese mills, on the other hand, will still entertain just about any price. However, some traders report that there have been problems with the boron-added rods from China that have arrived recently, including the material being too soft, broken or shifted bundles, and other problems occurring in transportation. One trader told SteelOrbis that he is avoiding Chinese offers altogether because of these quality problems. "When the market is falling, you really don't want any problems with the material," he said.
For now, the market is, indeed, still falling, and while it is getting closer to the bottom, there is still further room for both domestic and import prices to decline. Wire rod does have some advantages over other long products, such as rebar, as the domestic rod industry has limited capacity, especially now that many mills have halted or slowed their operations in reaction to the slow demand. Additionally, despite the cheaper import offers, there have not been very many bookings taking place since prices started to fall in August.
It has been speculated that the US might see an influx of rod imports in the coming months; however, as traders have been hesitant to take on positions in recent months, the majority of the incoming import offers already have buyers, so it is unlikely that there will be a glut of import rods sitting at the ports. Still, sold or not, import totals are going up, which is not a positive development in a weak demand environment.
Import License data from the Steel Import Monitoring and Analysis System (SIMA) show a significant increase in wire rod imports in October compared to September, and compared to October 2007. Based on licensing data collected through November 4, wire rod imports totaled 126,599 mt in October 2008, compared to Preliminary Census Data of 81,826 mt in September and Census Data of 69,791 mt in October 2007. The US' largest sources of import wire rod licenses in October 2008 were: China, at 57,607 mt; Canada, at 21,484 mt; Brazil, at 15,987 mt; Turkey, at 14,179 mt and Japan, at 11,490 mt.