While wire rod sales in the US are still slow, it seems that domestic mills' $30 /nt ($33 /mt or $1.50 cwt.) price increase for October shipments has been largely accepted by most buyers, although grudgingly.
Market prices have risen by approximately $10 /nt ($11 /mt or $0.50 cwt.) in the past week, following the $20 /nt increase seen in recent weeks. Most domestic low carbon offers now range from $29.00 cwt. to $30.00 cwt. ($639 /mt to $661 /mt or $580 /nt to $600 /nt), while high carbon offers range from $31.50 cwt. to $32.50 cwt. ($694 /mt to $717 /mt or $630 /nt to $650 /nt). The domestic pricing trend is still slightly up.
Mills are hoping to raise prices further in the first quarter, so they are only extending the current prices through the end of December. Certain mills will slow production towards the end of the year, like Gerdau Ameristeel, which will idle its Beaumont plant and Arcelor Mittal its Georgetown rod plants for a couple weeks in December for maintenance purposes. The reduced amount of domestic material available along with the very low amount of import arrivals expected for the rest of the year should help to make first quarter price increases more feasible.
Wire and mesh producers have followed the rod mills' price hike and then some, with ArcelorMittal's US operations announcing a $40 /nt price hike for November shipments of its wire products. Two major US mesh producers are also reportedly hiking prices by as much as eight percent. However, mesh producers tell SteelOrbis that they are worried that rod prices will continue to rise, cutting into their bottom line. Building mesh is closely related to the housing market and for that reason is expected to continue seeing very slow business for the balance of the year.
As for rod imports in the US, prices have remained stable since last week, with most import mesh quality rod offers still ranging from $29.50 cwt. to $30.50 cwt. ($650 /mt to $672 /mt or $590 /nt to $610 /nt) FOB, loaded truck, in US Gulf ports, and drawing quality offers still ranging from $31.25 to $32.25 cwt. ($689 /mt to $711 /mt or $625 /nt to $645 /nt) FOB, loaded truck, in US Gulf ports. Prices are slightly higher on the East and West Coasts, by approximately $0.50 cwt. ($10 /nt or $11 /mt).
Due to the high ocean freight rates and the possibility of a Chinese export tax increase, import wire rod pricing in the US is expected to continue trending upwards. There are very few takers at the current import pricing levels, however, and import arrivals should remain very low until US demand improves or import prices reverse their trend.
Once comprising more than half of US consumption, imports have been missing from the market for the second half of 2007. Any new arrivals from China, the US' largest importer, will not arrive before February 2008. Due to high prices, US wire drawers are not fixing any future deals with their traders, though things may get really tight between now and February. For now, low demand for wire products and wire rod is keeping prices more or less stable with prices increasing in small increments.
Import rod inventories are going down, and there is not much on the pipeline. Any spike in demand, perhaps for the spring season, may generate unpleasant shortages. Of course, wire drawers can protect themselves by buying some higher priced imports, which is quite unusual. Naturally, they are very reluctant to do so. But hedging some of the requirements and paying more for imports now would certainly be a better alternative to running out of material or paying sky-high domestic prices deep in the first quarter of 2008.