Import prices have been close to domestic prices over the last four months; however, the recent softening of domestic prices has finally made imports more expensive than domestic rods at the low carbon end of the spectrum. In the past week, offering prices from domestic mills have come down by approximately $0.50 cwt., with most low carbon offers now ranging from $28.00 cwt. to $29.00 cwt. ($617 /mt to $639 /mt or $560 /nt to $580 /nt) FOB mill. Domestic high carbon offers range from $30.50 cwt. to $31.50 cwt. ($672 /mt to $694 /mt or $610 /nt to $630 /nt) FOB mill. This is an unannounced price decrease on balance, and large customers are often able to get deals even below these numbers.
These prices compare to import sources' current wire rod offering prices for the US: import mesh grade wire rod offers 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 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.
Domestic mills have not been able to raise prices or even maintain them due to the lack of orders. Luckily for the mills, scrap costs have not increased recently, so for the most part, they are not losing money by lowering prices slightly. Also, some speculate that the domestic rod mills are trying to gain a competitive advantage by keeping prices low in relation to imports, hoping to get customers hooked on domestic steel again. The low carbon wire rod markets have been dominated by imports in the last five years, but domestic rod producers have recently achieved excellent penetration to typical import buyers such as mesh makers. As long as domestic rod sales are soft and the dollar is weak, domestic rod makers will enjoy this unusual phenomenon for a while longer.
Meanwhile, import buying activity remains very slow due to the export tax and VAT rebate cancellation for Chinese wire rod - factors which have kept the Chinese wire rod offers for the US high despite the lack of demand. Also, increasing ocean freight rates for Asian cargoes bound for the US are also deterring traders from booking many Chinese offers. Other sources such as Turkey are still not all that competitive against China even though the pricing gap between Chinese rods and other import rods has been narrowing. Preliminary census data from the US Import Administration show that in June 2007, wire rod imports totaled 150,000 mt, compared to 250,300 mt imported in June 2006. In June 2007, the most import wire rod tonnages came from the following countries: China, at 97,328 mt; Canada, at 23,014 mt; Brazil, at 13,113 mt; Japan, at 7,289 mt; and Germany, at 4,013 mt.