Import wire rod pricing is shooting up like a rocket, but actual demand is more down to Earth.
Turkish mills held out buying scrap from the US for as long as they could, preferring to buy less expensive European scrap. However, within the last couple of weeks, Turkey's low scrap inventories and increasing demand for finished steel products has led them to start importing scrap from the US again. The higher raw material costs have translated into higher prices for all Turkish steel products, even though the rising demand has more to do with Middle Eastern construction, which doesn't necessarily affect the wire rod market.
As a result of this big raw materials push, wire rod offers from Turkey have climbed by about $2.00 cwt. ($44/mt or $40/nt) from last week, with new prices ranging between $33.00 cwt. to $34.00 cwt. ($728/mt to $750/mt or $660/nt to $680/nt) duty paid, FOB loaded truck in US Gulf ports. However, traders are not booking at these high prices yet.
With the Turkish mills essentially priced out of the market, China has re-entered the US import market for wire rod, although this could be a temporary situation. For now, Chinese wire rod offers fall in the range of $32.00 cwt. to $33.00 cwt. ($705/mt to $728/mt or $640/nt to $660/nt) duty paid, FOB loaded truck in US Gulf ports, slightly better than Turkish offers.
Domestic wire rod pricing has not yet reacted to the price increases overseas, and offers have remained stable in the last week, still ranging from $32.00 to $33.00 cwt. ($705/mt to $728/mt or $640/nt to $660/nt) ex-Midwest mill. Another price increase for May is all but assured, and it is expected that mills will bump up the base price for wire rod by approximately $3.00 cwt. ($66/mt or $60/nt). For now, mills are getting what they're asking for, indicating an uptrend for wire rod. New domestic pricing level may allow some of the high import offers as indicated above.
Demand for finished wire is still sluggish, but wire mesh producers have started seeing some orders trickling in. Mesh buyers ran their inventories down to bare-bones levels, and are continuing to buy even though construction demand is still tepid. Elsewhere, the automotive sector is still doing relatively well, boasting increased sales in the first three months of the year. As of the end of March, total US light vehicle sales totaled 2,538,852 for 2010, a 15.6 percent increase from the same period of 2009.