Rising scrap prices overseas have lifted Turkish wire rod prices in the last week, but US buyers have shown little to no acceptance for offers coming so close to weakened domestic prices.
Turkish mills are offering imported wire rod for about $0.50 cwt. ($11/mt or $10/nt) more than last week, but purchase prices in the US have not changed, mainly because no one is biting. With current spot prices still in the range of $28.50 cwt. to $29.50 cwt. ($628/mt to $650/mt or $570/nt to $590/nt) duty paid, FOB loaded truck in US Gulf ports, US buyers are instead turning to domestic mills to meet their needs, considering that the spread between import prices and domestic prices is so narrow. For now, Turkish mills are biding their time, and not feeling much pressure to scale back their recent price increases.
Domestic wire rod has remained stable, with ample deals for attractive customers. Buyers with large orders or cash on hand can procure wire rod for less than the current asking price of $30.50 cwt. to $31.50 cwt. ($672/mt to $694/mt or $610/nt to $630/nt) ex-mill. However, speculation that scrap pricing might go up this month abounds, which means the wide open window for negotiation might soon come to a close. The estimated $20-$30/long ton increase for shredded may not be enough to raise prices for domestic wire rod, but it will likely firm up existing asking prices.
Another factor that might help strengthen domestic wire rod is last month's improvement in the automotive sector. While June sales slumped, July automotive sales in the US marked a 5 percent improvement since last year, with GM posting a gain of 6 percent with 199,602 cars and light trucks sold. Chrysler reported a 5 percent gain, while Ford's July sales improved 3 percent. Sales for the rest of the summer are expected to show greater monthly gains, as seasonal demand for new models and reduced-price older models increases. Of all the end-use sectors wire rod depends on, automotive has proven to be the most reliable throughout the economic recovery.