As demand for wire rod in the US and around the world continues to wane, import rod offering prices for the US have come down another notch.
Since last week, mesh-quality import rod offers from Turkey have declined by approximately $0.50 cwt., with most new offers from the US now ranging from approximately $24.25 cwt. to $25.25 cwt. ($535 /mt to $557 /mt or $485 /nt to $505 /nt) duty-paid FOB loaded truck in US Gulf ports. Furthermore, the pricing trend for import rod is still headed downward as Turkey, the US' main import rod source, is suffering from a serious lack of demand from both its domestic and export markets. There are also South American offers at or below the above level available on a sporadic basis.
Traders are feeling the slump especially acutely, since, with prices still moving on a downward slope, they do not want to take the risk of booking an order with an import mill if they do not have a back-to-back deal from a customer. And with US rod customers such as wire companies also experiencing a slowdown in business as well as relatively high rod inventories, there are very few new orders being placed. Even some trading companies are said to have high inventories of wire rod.
As for the US' other typical import rod source, China, mills are still absent from the US market due to their higher price expectations based on the relative strength of their home market. However, given the lack of steel demand around the world and the depth of the current economic crisis, many market players think that the Chinese market may not be able to sustain its recent success. Without a recovery in export business, China's domestic consumption alone will likely not be enough to bolster its large steel and manufacturing industries.
On the domestic side of the US wire rod market, offers have mostly trended sideways since last week, with the majority of offers for low carbon rod ranging from approximately $29.00 cwt. to $30.00 cwt. ($639 /mt to $661 /mt or $580 /nt to $600 /nt) FOB mill. However, customers report that domestic mills seem to be increasingly willing to negotiate in order to get some orders, and in that sense, there is no firm market price. In fact, there have even been some high-carbon offers heard to be available at the above price range.
The overall pricing trend for domestic rod is also still down due to the lack of business. While mills would obviously like to hold prices steady, the weak market conditions will continue to dictate the prices, likely pushing them down at least a little further before a true bottom is reached.