Import wire rod offers for the US have all but dried up in the past week, as the Chinese export tax for wire rods along with Turkey's skyrocketing scrap prices have made these usual import suppliers reluctant to offer.
As SteelOrbis announced on December 26, the Chinese government's export tax on wire rods will increase from 10 to 15 percent as of January 1. This will add approximately $30 /mt to the mills' cost, and for this reason China will certainly be absent from the US market for a long time. This is not a huge change though, as there are already virtually no workable offers from China.
At the same time, Turkey, another import rod source for the US, is refraining from offering much tonnage because its scrap costs are climbing rapidly -- Scrap prices in Turkey have climbed $20 to $30 /mt in the last week alone -- and longs mills would rather wait to see how much higher scrap will rise before naming a price.
The few offers available from Turkey and Northern Europe have increased by approximately $20 /nt in the past week, with most mesh quality offers now ranging from $32.50 cwt. to $33.50 cwt. ($717 /mt to $739 /mt or $650 /nt to $670 /nt) FOB, loaded truck, in US Gulf ports, and most drawing quality offers ranging from $34.25 cwt. to $35.25 cwt. ($755 /mt to $777 /mt or $685 /nt to $705 /nt) FOB, loaded truck, in US Gulf ports. When the Turkish and European mills return to the market after the holidays, it is expected that further price increases will be announced.
While the import offers are significantly higher priced than their domestic counterparts, imports are starting to look more attractive to wire rod buyers in the US as inventories are very low, and domestic mills are talking openly about allocation.
In the US' domestic market, not much has happened since last week because of the holidays, and it is still unclear whether or not the domestic mills will get the asked for $40 /nt increase for February shipments. The mills are still optimistic that customers will accept the increase, and the general expectation in the market is that prices will start firming up in January.
For now, most domestic low carbon rod offers continue to range from $30.50 cwt. to $31.50 cwt. ($672 /mt to $694 /mt or $610 /nt to $630 /nt) FOB mill, while high carbon offers range from $33.00 cwt. to $34.00 cwt. ($728 /mt to $750 /mt or $660 /nt to $680 /nt) FOB mill.