The pricing trend for import wire rod offers in the US has shifted to slightly down as Chinese mills are actively seeking business to make up for their reduced domestic demand.
With the coming Olympic Games in Beijing, many projects have been put on hold, and thus Chinese domestic demand for wire rod has declined somewhat. For this reason, Chinese mills are quoting at slightly lower numbers than they were in the previous week.
Most traders' prices of Chinese boron-added rods for US customers continue to range from approximately $56.50 cwt. to $57.50 cwt. ($1,246 /mt to $1,268 /mt or $1,130 /nt to $1,150 /nt) FOB loaded truck in US Gulf ports; however, offers at the upper end of this range are having problems finding homes, and it is expected that this range will come down slightly.
There are once again rumors, however, that the Chinese government will change the tax policy for these imports imminently. August 15 is now the rumored date for the supposed deadline for these imports to still receive the VAT which allows Chinese mills to export these products so competitively; however, past rumored "deadlines" have come and gone without any change. However, if such a change does occur, then Chinese rod prices would shoot up considerably as a result.
On the domestic side of the US wire rod market, the pricing trend remains neutral. Prices are not expected to come down in the next month, though it is likely that mills will keep prices stable in September, putting at least a temporary end to the seemingly never-ending string of price increases the US wire rod market has seen every month of this year.
It is no secret that demand is weak, but high import prices and rising scrap costs have allowed rod producers to keep raising their prices. But now, with import prices finally leveling off (at least for the time being) and shredded scrap prices trending sideways at best, it is expected that mills will likely keep their rod prices stable in September, and possibly through October as well.
There is no talk, however, of domestic rod prices coming down at all in the near future. The market's supply problems aren't expected to end anytime soon, as China is still the only source offering imports, and not nearly at the volumes that they once did. Also, many believe that it is only a matter of time before the Chinese government closes the export tax loophole and these imports dry up. On the domestic side, output is reduced, as mills are not working at full capacity. Several major mills are undergoing routine maintenance outages this summer, which should further reduce supplies.
Domestic low carbon wire rod prices for August shipment currently range from approximately $56.00 cwt. to $57.00 cwt. ($1,235 /mt to $1,257 /mt or $1,120 /nt to $1,140 /nt) FOB mill, while high carbon rods range from $58.50 cwt. to $59.50 cwt. ($1,290 /mt to $1,312 /mt or $1,170 /nt to $1,190 /nt) FOB mill. Mills are charging an extra of $20 /nt ($22 /mt or $1.00 cwt.) for 5.5 mm (7/32-inch) rods.