The pricing trend for domestic
wire rod in the US is still up, as mills are hiking their rod prices up $40 /nt for April shipments.
The increase is largely cost-driven; big orders have not been placed with domestic mills yet, and the
wire business is still not that strong. Meanwhile,
scrap and
billet prices have been increasing for the past few months, causing
wire rod producers to raise their prices a total of $70 /nt from February prices (As we reported last week, mills raised prices $30 /nt for March shipments). However, while the $30 /nt March increase was widely accepted in the market, it remains to be seen whether or not customers will pay the full $40 /nt April increase when the market is still not that strong. In the past, domestic mills have been willing to negotiate prices when the market is not robust. In the coming weeks, we will start to see whether the mills will be open to negotiations for large buyers or if they will stick to their official prices this time around.
SteelOrbis believes even though the domestic mills are showing a lot of weaknesses in their sales prices right now, especially to some mesh makers, almost certainly some of the April increases will stick. However, it remains to be seen if the entire $40 /nt increase will be digested by the market.
As an independent
opinion, Charles Bradford, president of independent research group Bradford Research, told the 500-some members of the audience at the Tampa Port Authority Steel Conference this week that he expects long product producers to get their announced increases.
For now, most domestic
wire rod offers in the market still range from $26.00 cwt. to $27.00 cwt. ($573 /mt to $595 /mt or $520 /nt to $540 /nt) FOB mill for low carbon, and from $28.50 cwt. to $29.50 cwt. ($628 /mt to $650 /mt or $570 /nt to $590 /nt) FOB mill for high carbon. However, these price indications do not yet include the latest price increase of $40 /nt as of April 1, 2007.
There has not been much activity in the import
wire rod market in the past week, as the Chinese market has returned back to work from the Chinese New Year holiday, but has not announced any new prices yet. However, traders say that the import pricing trend for
wire rod is still strong and that another price increase is on the way. Although the expected VAT rebate reduction has not yet been officially announced, most of the Chinese mills are asking customers to split the additional cost that will incur when the reduction is applied, thus hiking the net price for Chinese
wire rod imports even higher.
For now, most import offers continue to range from $25.50 cwt. to $26.50 cwt. ($562 /mt to $584 /mt or $510 /nt to $530 /nt) FOB, loaded truck, in US Gulf ports, for mesh quality, and from $27.50 cwt. to $28.50 cwt. ($606 /mt to $628 /mt or $550 /nt to $570 /nt) FOB, loaded truck, in US Gulf ports for drawing quality.