Due to the Chinese government's export tax on certain long products, including wire rod, most import wire rod offering prices for the US have increased by approximately $0.50 cwt. ($10 /nt or $11 /mt) in the past week; however, there are no takers at these higher numbers yet.
It has now become a game of "who blinks first" -- will buyers accept these higher prices, or will the Chinese mills lower their prices to generate some orders? It is hard to say at this point, though there is a good chance that Chinese prices will rise slightly, but not the full $45 /nt ($2.25 cwt. or $50 /mt) amount that the new export tax will add in costs. Some Chinese mills have reportedly already decided to absorb the export tax. Also, in addition to the weak demand in the US, Chinese domestic wire rod prices, along with other long product and billet prices, are softening. Still, the Chinese mills may be able to get a portion of the increase if the discount offers that domestic mills are still offering for large tonnage buyers start to disappear from the market. In general, the import pricing trend is still up.
Import offerings for mesh grade wire rod now 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. Drawing quality offers now 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.
Turkey may soon start offering wire rods more competitively to the US again, as there are indications that the European wire rod market, which purchases a large percentage of wire rods from Turkish mills, is starting to soften. Therefore, Turkey will have to turn to the US for offers, and unless both US domestic and Chinese prices rise significantly, Turkish offering prices will have to undergo a major correction. For the time being, however, Turkish wire rod offers for the US are still significantly higher than Chinese offers.
Sales activity in the US wire rod market remains very quiet, but recent price increases for automotive scrap bundles as well as rising import offering prices might help relieve some of the pressure for domestic mills to reduce pricing.
Auto bundle prices have increased by $10 to $20 per long ton in recent weeks, and this may signify that a turnaround in the shredded scrap market is to come. If shredded scrap prices rise (though only a slight increase, if any, is expected), domestic wire rod mills may be able to raise their offering prices to some degree. The lack of import arrivals and rising Chinese prices will also help keep the domestic market tight. Market sources tell SteelOrbis that mills are considering a price increase for August shipments of approximately $10 /nt, though nothing official will be announced for the next couple of weeks.
For now, most domestic low carbon wire rod offers on the market 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. The pricing trend remains slightly up.