Wire rod buying activity in the US still hasn't picked up to full speed following the holidays, but it is expected that sales prices this month will reflect the domestic mills' $40 /nt ($44 /mt or $2.00 cwt.) price increase for February shipments.
Taking into account the latest price increase, most new domestic offers for low carbon will range from $32.50 cwt. to $33.50 cwt. ($717 /mt to $739 /mt or $650 /nt to $670 /nt) FOB mill, while most high carbon offers will range from $35.00 cwt. to $37.00 cwt. ($772 /mt to $816 /mt or $700 /nt to $740 /nt) FOB mill.
Mills are not overwhelmingly full, and there is still some cheaper material currently being delivered from previously struck deals, but it is almost certain that the market will accept the February price increase. Moreover, further price increases are likely to come because of the rapidly rising import prices as well as the major increase in domestic scrap prices seen this week (Shredded rose as much as $80 /long ton, depending on the region).
As more import wire rod price increases as well as scrap prices increases are on the way, the pricing trend for domestic wire rod remains strongly up.
Import prices have also registered a $2.00 cwt. rise in the past week, with most offers for mesh quality rods now ranging from $34.50 cwt. to $35.50 cwt. ($761 /mt to $783 /mt or $690 /nt to $710 /nt) FOB, loaded truck, in US Gulf ports, and most drawing quality offers now ranging from $36.25 cwt. to $37.25 cwt. ($799 /mt to $821 /mt or $725 /nt to $745 /nt) FOB, loaded truck, in US Gulf ports. There is still some old material coming in at lower numbers, but the offers available for future shipment are at the given range.
Import prices have increased due to the rising scrap and wire rod prices in Turkey. With the latest Chinese export tax increase for wire rods, the export tax now stands at 15 percent, rendering Chinese offers obsolete for the US market, and Turkey the only major import wire rod source offering to the US. The pricing trend for import wire rod is strongly up, as the numbers that Turkish mills are currently asking for are significantly higher than the current range offered by traders.
In other import news, the US DOC announced this week the final result of its expedited sunset reviews of the antidumping orders against carbon and certain alloy steel wire rod from Brazil, Canada, Indonesia, Mexico, Moldova, Trinidad and Tobago, and Ukraine, and of the countervailing duty order against wire rod from Brazil. As expected, the DOC decided to continue these orders. Therefore, there will be no relief from the Department that would give wire drawers more choices for their raw materials.
The ruling comes at a time when import prices are higher than the domestic level, so it is not well understood by the wire drawing community why discontinuation of the order would hurt the domestic rod industry. If these antidumping orders were revoked, chances are that the countries mentioned above would not flood the US market, as they are now controlled by larger and consolidated steel companies. The price of imported wire rod would have continued to rise, but by having more choices at the US wire drawers' disposal, the rest of the allowed countries such as Turkey would not have the upper hand that has allowed Turkish mills to raise their prices so freely in recent weeks.
License data from the US Import Monitor continue to show a decrease in wire rod import arrivals to the US in 2007 as compared to 2006, with a significant decrease in wire rod imports from China in particular. Year-to-date (YTD) through October 2007, wire rod imports totaled 1,241,579 mt, compared to 2,385,118 mt for the same period of 2006. The main wire rod import sources for the US from January through October 2007 were: China, at 529,638 mt (compared to 1,037,572 mt YTD October 2006); Canada, at 281,236 mt; Brazil, at 116,537 mt; Japan, at 91,664 mt; and Trinidad and Tobago, at 80,671 mt. Chinese imports will continue to diminish in 2008 due to increases in the export tax.