US wire rod market – Domestic prices headed back up

Thursday, 27 September 2007 11:54:48 (GMT+3)   -  

While wire rod demand is still fairly slow, the market has started to accept the price increase announced by domestic mills last week.

After Mittal announced a $30 /nt ($1.50 cwt. or $33 /mt) price increase for October wire rod shipments, Gerdau Ameristeel and Keystone followed suit with similar price moves. Although raw material costs have risen enough to account for a price hike under normal market conditions, these increases came as a surprise to some since there has been no apparent rebound in demand. However, mills have started to see some increase in demand from wire drawers, and with import prices now more expensive than domestic rods and ocean freight rates continuing to soar, more buyers will choose to buy domestic.

On the whole, domestic offering prices for wire rod have risen by approximately $0.50 cwt. ($10 /nt or $11 /mt) in the past week, and more small, incremental increases may take place in the coming weeks. Domestic low carbon offers now range from $28.00 cwt. to $29.00 cwt. ($617 /mt to $639 /mt or $560 /nt to $580 /nt), while high carbon offers range from $30.50 cwt. to $31.50 cwt. ($672 /mt to $694 /mt or $610 /nt to $630 /nt). The pricing trend for domestic rods is now slightly up.

On the import side, prices have remained stable in the past week, though the pricing trend is still strongly up. There are still no fixtures at current price levels, and there is still talk of a possible five percent increase in the export tax for Chinese wire rods, which would raise import prices even higher.

New import offers for mesh quality wire rod continue to range from $29.25 cwt. to $30.25 cwt. ($645 /mt to $667 /mt or $585 /nt to $605 /nt) FOB, loaded truck, in US Gulf ports, while import drawing quality rods range from $31.00 cwt. to $32.00 cwt. ($683 /mt to $705 /mt or $620 /nt to $640 /nt) FOB, loaded truck, in US Gulf ports. Prices are slightly higher on the East and West Coast, by approximately $0.50 cwt.

There are some traders' inventories in Houston that are offered significantly lower than the above future offers. These unsold inventories currently keeping spot prices down. However, if the upward momentum continues for both domestic and import pricing, these inventories should clear quickly, allowing for more price increases to take place. 

Data from the US Import Administration show that for the first eight months of the year, the total amount of wire rod imported to the US was 1,072,567 mt, compared to the 2,148,745 mt of wire rod imported during the same period of 2006. From January through the end of August 2007, the top importers were: China (487,150 mt), Canada (220,087 mt), Brazil (101,663 mt), Trinidad & Tobago (80,670 mt), and Japan (80,670 mt).

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