The US wire rod market is still slow, with domestic prices expected to go down on a broad front in August because of the sluggish wire rod business. Some sources speculate that prices might decline between $5 to $10 /nt ($5.50 /mt to $11 /mt or $0.25 cwt. to $0.50 cwt.)
It seems that even with the lack of import rod shipments, domestic mills are unable to fill their order books. The market outlook is rather bleak as there doesn't seem to be any turnaround in sight. A trader told SteelOrbis this week that due to the slow economy and worsening state of the housing market, he doesn't expect to see the wire rod market turn around until Q2 '08 at the earliest.
The pricing trend for domestic wire rod remains down, though offers have remained pretty stable since last week. Most domestic low carbon offers 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. However, large buyers are still able to get prices slightly below this range.
Import rod offers also remain at the same pricing levels as last week, though very few new sales are taking place.
It remains to be seen whether Chinese mills will lower their offering prices to the US to reflect the weak demand, or if they will stick to their prices and refrain from exporting to the US, which is what the Chinese government intended by issuing the export tax on rods. So far, Chinese mills have stuck to their guns, and for this reason in addition to the high freight rates in Asia, the pricing gap between Chinese import offers and the higher priced Turkish offers has narrowed, with Turkish import rod offers getting increasingly closer to the Chinese pricing. Still, current import pricing does not compare favorably with domestic pricing.
Year to date through June, wire rod imports to the US totaled 821,500 mt, compared to total wire rod imports of 1,419,900 mt during the same period of 2006. YTD through June, China remained the largest exporter of wire rod to the US, with 383,566 mt, followed by Canada at 169,658 mt, Brazil at 78,426 mt, Trinidad & Tobago at 64,464 mt, and Japan at 45,530 mt.