Import wire rod prices in the US are still trending up, with traders preparing to raise their numbers to match the new price increases out of China.
Traders say that there are still some positions for Chinese rod on their way to the US booked at a range of $49.00 cwt. to $50.00 cwt. ($1,080 /mt to $1,102 /mt or $980 /nt to $1,000 /nt) FOB loaded truck in US Gulf ports; however, based on early indications of new price increases from Chinese mills, the new range for the next booking period will be $50.00 cwt. to $51.00 cwt. ($1,102 /mt to $1,124 /mt or $1,000 /nt to $1,120 /nt) FOB loaded truck in US Gulf ports.
Turkey, which has been a large import rod supplier to the US in months past, is, for all intents and purposes, out of the market at the moment since their offering prices are far too high to gain any interest in the US. Turkish mills are not anxious to lower their numbers to get US business as other markets, namely the UAE, are gladly paying their asked-for prices. European offers, mostly from Germany, are also too high-priced to gain a foothold in the US market at the moment.
Due to the fears of a supply shortage in the US rod market, however, it is possible that customers will eventually start paying these higher import prices. And with US domestic prices also on the rise, it is possible that the large gap between US and international prices (excluding the Chinese offers) will soon narrow considerably or disappear altogether, which could also encourage more import buying.
For now though, rod imports are just barely trickling in, and things are expected to get even tighter in June. An increase in Chinese rod import arrivals is expected for July, as a good deal of tons have been booked from China in recent weeks, although a huge influx is not expected. There are some worries though that these relatively low-priced boron-added "alloy" rods that will arrive at US ports this summer may not meet tensile strength standards for drawing.
On the domestic side, spot prices for low carbon rods are still at a range of $50.00 cwt. to $51.00 cwt. ($1,102 /mt to $1,124 /mt or $1,000 /nt to $1,120 /nt) ex-mill, and high carbon offers range from approximately $52.50 cwt. to $54.50 cwt. ($1,157 /mt to $1,202 /mt or $1,050 /nt to $1,090 /nt) ex-mill, following domestic mills' $60 /nt increase for June shipments.
The pricing trend for domestic rods is still strongly up, based on the rising raw material costs as well as the lack of supply in the market. SteelOrbis asked a domestic rod mill executive this week whether a possible increase in Chinese imports this summer could put the breaks on further domestic price hikes. The executive replied, "It doesn't make a huge difference what happens with imports, whether they come back or not, because really the price increases from our side are based on raw materials and energy, and as long as those costs continue to rise we're gonna have to keep passing them along."
While many would argue that imports, or the absence of them, are a major factor in why the rod market is so tight and why domestic mills are able to keep hiking their prices, it is also true that raw material costs are on the rise, and if producers aren't able to pass them to customers they won't be able to make profits. Fortunately for the mills, so far the rod cost-based increases have been successfully passed on to both rod buyers and wire customers.
This week, ArcelorMittal announced an additional June price increase for its wire products of $60 /nt to go into effect with orders shipped June 15. This increase is in addition to a previously announced $60 /nt increase effective June 1. Other US wire drawers are expected to follow ArcelorMittal's lead and hike their prices again to match their raw material costs. Not including these June increases, domestic wire prices in the US have already risen an amazing $600 /nt ($661 /mt or $30.00 cwt.) since January 1. When the same mill executive was asked if he expected customers to keep accepting more price increases, he admitted, "I really don't know. I'm surprised they've accepted all of them so far."
In other domestic news, Cascade Rolling Mills Inc. and United Steelworkers Union representatives are expected to go back to the bargaining table Tuesday following a one-shift strike which temporarily shut down production at the company's McMinnville, Oregon melt shop last week. Union Local 8378 officials say that the small strike was in response to the company's failure to produce a satisfactory labor contract to the union, which has been working without a contract since April 1.