Although the US wire rod market has yet to post a meaningful rebound, based on the latest import developments, the days of very low prices may be coming to an end.
While it is not clear yet whether Turkish longs mills' price hikes will be accepted by US customers, US traders report that they have received an increased number of inquiries over the last week. Inventory levels among traders and customers alike are still at relatively high levels, particularly in areas like Houston, but with the new higher prices out of Turkey, many traders are now trying to sell their inventories at the new market price.
However, despite the increase in buying interest, there have been few, if any, deals concluded at the higher levels. The last accepted import offer level at which orders were booked has not changed from last week's $22.50 cwt. to $23.50 cwt. ($496 /mt to $518 /mt or $450 /nt to $470 /nt) duty-paid, FOB loaded truck in US Gulf ports (for Turkish, mesh quality rods). Nevertheless, this price range may creep up in the coming weeks.
The latest preliminary census data from the US DOC show a total of 38,035 mt of wire rod imports in February 2009, compared to 78,378 mt imported in January 2009 and 70,502 mt imported in February 2008. The largest US' import sources for wire rod in February 2009 were: Canada, at 22,842 mt; Japan, at 6,892 mt; Brazil, at 6,202 mt; Mexico, at 1,091 mt; and Germany, at 701.4 mt. Turkey did not represent a statistically significant source of wire rod imports in February 2009, compared to 33,410 mt of wire rods imported from Turkey in the prior month of January 2009.
On the domestic side, while orders remain depressed, mills are taking a cue from their foreign competitor and are making more of an effort to resist further price decreases. While prices may still fall further, especially if raw material costs continue to decrease or if the Turkish price hikes aren't accepted, it seems that US mills are now making a concerted effort to find a floor price.
Most domestic offers for low carbon rods continue to range from $25.00 cwt. to $26.00 cwt. ($551 /mt to $573 /mt or $500 /nt to $520 /nt) ex-mill.