Domestic wire rod prices have not changed in the past week, and so domestic producers are now resigned to the fact that only $80 to $90 /nt ($88 /mt to $99 /mt or $4.00 cwt. to $4.50 cwt.) out of the total $125 /nt ($138 /mt or $6.25 cwt.) in increases that were announced over the past few months have gained acceptance.
Soft scrap prices probably put the last nail in the coffin of the announced price increases, and now the domestic pricing trend for wire rod is only neutral, as mills will not be able to recoup the remaining amount of the May increase. Domestic prices for low carbon wire rod continue to range from $29.00 cwt. to $30.00 cwt. ($640 /mt to $661 /mt or $580 /nt to $600 /nt) FOB mill. High carbon offers still range from $31.50 cwt. to $32.50 cwt. ($694 /mt to $717 /mt or $630 /nt to $650 /nt) FOB mill.
While wire demand remains relatively soft primarily due to the depressed housing market, there is still wire rod being consumed, and we may be close to reaching a point when inventories have declined and people will have to start buying again. Low inventories, low import tonnages and increasing import prices will help prevent US wire rod prices from depreciating, despite the down-trending scrap prices.
After returning from their May holiday, Chinese mills increased their prices for traders $10 -$15.00 /mt because of their strong domestic market, the elimination of the VAT rebates and the strong global market outside of the US. However, US customers are unlikely to accept these higher offers until they start to experience shortages and domestic prices start to rise again. At this point, the Chinese mills will not lower their prices simply based on a lack of US buying interest, since wire rod demand is strong elsewhere in the world, and other markets will pay these higher prices.
For now, most offers of import mesh grade wire rod available for US customers still range from $27.25 cwt. to $28.25 cwt. ($601 /mt to $623 /mt or $545 /nt to $565 /nt) FOB, loaded truck, in US Gulf ports, while drawing quality wire rod ranges from $29.00 cwt. to $30.00 cwt. ($640 /mt to $661 /mt or $580 /nt to $600 /nt) FOB, loaded truck, in US Gulf ports. Even though there is significant resistance to these higher price levels, the import pricing trend remains slightly up.
Data from the US Import Administration show that the countries that exported the most wire rod tonnage to the US from January through the end of April 2007 are: China at approximately 222,000 mt, Canada at 117,200 mt, Brazil at 50,500 mt (mostly high carbon), Trinidad & Tobago at 44,800 mt, and Japan at 28,500 mt (mostly high carbon).