US wire rod mills are trying to hang on onto their current offering prices for August shipments, but the mounting pressure from big buyers for the mills to lower prices may result in a small price drop come August.
Despite the lack of import material coming into the US, domestic wire rod mills are still looking for orders for August rolling, and there is talk that they may have to lower their prices as of August 1. Early indications are that after the August price drop, prices will stay relatively flat until September, and then bounce back in October when customers' inventories dip low enough to spur buying activity at higher prices.
For now, most domestic wire rod prices continue to range from $29.00 cwt. to $30.00 cwt. ($640 /mt to $661 /mt or $580 /nt to $600 /nt) FOB mill. High carbon offers still range from $31.50 cwt. to $32.50 cwt. ($694 /mt to $717 /mt or $630 /nt to $650 /nt) FOB mill. There are still some special offers for large buyers available below this level. The pricing trend is now slightly down, as market conditions are such that an August price decrease seems nearly inevitable.
Meanwhile, import wire rod offering prices have remained stable in the last week, though the import pricing trend is now down. This week, mesh grade wire rod import offers on the market continue to range from $28.25 cwt. to $29.25 cwt. ($623 /mt to $645 /mt or $565 /nt to $585 /nt) FOB, loaded truck, in US Gulf ports, while import offers for drawing quality rods still range from $30.00 cwt. to $31.00 cwt. ($661 /mt to $683 /mt or $600 /nt to $620 /nt) FOB, loaded truck, in US Gulf ports.
China's current offering prices are not working with the current slow market conditions in the US; however, they have not yet lowered their numbers enough to conclude significant orders in the US. For the time being the export tax is having its intended effect of curtailing China's wire rod exports.
Chinese prices must come down if the mills want to participate in the US market, sources say. The Chinese mills may eventually give in and lower their offering prices for the US, since their domestic numbers are going down, and their other export markets, such as the European and Middle Eastern markets which were hot a few months ago, have also slowed down. A market source told SteelOrbis this week that in order for any import buying to take place in this slow market, import offers need to be priced at least $1.50 cwt. ($30 /nt or $33 /mt) less than domestic offers.
Data from the US Import Administration show that wire rod imports in June totaled 154,800 mt (rounded to the nearest hundred tons). Year to date through June, wire rod imports to the US totaled 821,500 mt, compared to the total wire rod imports during the same period of 2006 - 1,419,900 mt. In June, China remained largest exporter of wire rod to the US, with 102,845 mt, followed by Canada at 21,011 mt, Brazil at 13,099 mt, Japan at 5,953 mt, and Germany at 5,335 mt. Brazil, Japan and Germany are currently high carbon sources, leaving China as the only major low carbon wire rod source, year-to-date.