The US wire rod market remains quiet in the first work week of the New Year, though mills are still sticking by their January price hikes and may be aided by further scrap price hikes this month.
Most domestic low carbon wire rod offers this week continue to range from approximately $28.50 cwt. to $29.50 cwt. ($628/mt to $650/mt or $570/nt to $590/nt) ex-mill, though the price trend remains up, with the transaction level expected to rise at least modestly in January.
US cut-grade scrap prices are anticipated to register a decent-sized increase of at least $40/long ton and as much as $60/long ton this month, which US wire rod producers are likely to pass along to their customers by means of a higher February surcharge. Producers may not be successful in passing through the entirety of their December and January scrap cost hikes, but with few import options and most customer inventories running low, mills have a good amount of price control as 2010 begins despite actual demand remaining slow.
Import rod offers to the US are also trending upwards despite lack of bookings. Mesh-grade offers from Turkey, the primary import source offering to the US, have risen by approximately $0.75 cwt. ($17/mt or $15/nt) in the last week, with most offers now ranging from $26.75 cwt. to $27.75 cwt. ($590/mt to $612/mt or $535/nt to $555/nt) duty-paid, FOB loaded truck in US Gulf ports. The price trend for import rod also remains up since, similar to US producers, Turkish mills are also adamant about passing along their rising raw material costs. However, with export demand remaining lackluster and very little price advantage in buying import currently, bookings are expected to remain light.
The latest import license data from the US Department of Commerce show that wire rod import permits rose in December when compared to both November permits and the November preliminary import total, though they were still down when compared to October final imports. US import licenses for wire rod in December 2009 totaled 89,766 mt, which compares to license data of 66,342 mt in November 2009, and preliminary census data of 56,657 mt in November (In October 2009, final wire rod imports totaled 111,598 mt).
The top sources of import wire rod in December based on the December 2009 license data collected through January 5, 2010 were: Canada (31,528 mt), Turkey (14,908 mt), Mexico (11,198 mt), Brazil (9,198 mt) and Italy (7,946 mt).
