US wire rod market looks forward to Q2 for better times

The domestic wire rod market remains slow, with very little sales action taking place. However, as inventories are slowly running out and shredded scrap prices are heading up, an increase in wire rod prices is on the horizon. Domestic pricing should remain stable for the rest of the first quarter, but rod producers are expected to announce an increase in wire rod pricing starting for April shipments. At this point, it looks like the increase may only be a modest $15 - $20 /nt, as the market is still not particularly strong, especially when compared to the rebar market. Rebar prices have already taken off domestically and import-wise, and are expected to continue their rapid rise. Despite the current sluggishness in wire rod demand, scrap prices are increasing and long product business should improve as inventories run out and winter turns into spring. Therefore, the pricing trend for domestic wire rod is still slightly up. For now, most wire rod offers from domestic mills still range from $24.50 cwt. to $25.50 cwt. ($540 /mt to $562 /mt or $490 /nt to $510 /nt) for low carbon, and from $27.00 cwt. to $28.00 cwt.($595 /mt to $617 /mt or $540 /nt to $560 /nt) for high carbon. Import prices have not changed since last week. However, the trend is now moving upward as the Chinese domestic wire rod market is getting stronger. Furthermore, China's domestic market situation should soon increase China's export prices as well. China is currently the only low-priced import source, but their export capacity is overwhelming. Import mesh grade wire rod offers for the US now range from $23.25 cwt. to $24.25 cwt. ($513 /mt to $535 /mt or $465 /nt to $485 /nt) FOB, loaded-truck, in US Gulf ports. Drawing quality offers now range from $25.00 cwt. to $26.00 cwt. ($551 /mt to $573 /mt or $500 /nt to $520 /nt) FOB, loaded-truck, in US Gulf ports, from most sources. However, there are very few drawing quality offers on the market at this time. Year-To-Date (YTD) data from the US Import Steel Monitor shows that from January through November 2006, the following countries exported the most wire rod to the US: China at 1,445,449 mt, Canada at 271,833 mt, Turkey at 227,631 mt, Brazil at 125,793 mt, and Trinidad & Tobago at 101,131 mt. The major change from YTD November 2005 to YTD November 2006 was that China's wire rod export tonnage to the US more than doubled from 565,801 mt in 2005 to over 1.4 million mt in 2006. The domination of Chinese rods in the US import market will continue in 2007.