The domestic wire rod market still hasn't accepted the $55 /nt ($61 /mt or $2.75 cwt.) increase for May announced by Mittal Georgetown and more recently by Gerdau Ameristeel. Nevertheless, the fact remains that we are getting very close to the point when decisions will have to be made, either on the side of the mills or on that of the consumers.
In the current game of "who will blink first," the big wire drawers may give in and start buying from domestic mills at their higher numbers. In the alternative scenario, the domestic mills may give in first and lower prices. The most likely outcome is that the mills will hold the line on their prices and insist that customers pay the higher numbers. The increase in prices is not only raw material-driven; it must also indicate that the domestic mills are busier than in the last three months, as they have been getting a lot of the business that usually goes to import sources. For example, mesh makers are seldom the target of domestic producers, but significant business has been conducted between the US rod mills and mesh makers in the first quarter. Still the entire $55 /nt increase will probably not go through, since wire rod demand in general is not all that robust. Large wire companies will use their strength to strike good import and domestic deals.
For now, most offers for domestic low carbon rod continue to range from $29.00 cwt. to $30.00 cwt. ($640 /mt to $661 /mt or $580 /nt to $600 /nt) FOB mill. High carbon offers still range from $31.50 cwt. to $32.50 cwt. ($694 /mt to $717 /mt or $630 /nt to $650 /nt) FOB mill. The pricing trend is strongly up, as at least some of the announced May increase should take hold.
Import mesh quality wire rod offering prices also have not changed since last week, and continue to range from $27.00 cwt. to $28.00 cwt ($595 /mt to $617 /mt or $540 /nt to $560 /nt) FOB, loaded truck, in US Gulf ports. Drawing quality offers continue to range from $28.75 cwt. to $29.75 cwt. ($634 /mt to $656 /mt or $575 /nt to $595 /nt) FOB, loaded truck, in US Gulf Ports.
New offers from China are becoming more plentiful, and Chinese mills are pushing traders to accept higher prices. Since the Chinese government's VAT rebate cancellation for wire rods came into effect on April 15, a number of Chinese mills are back in the market but have higher price expectations. For this reason primarily, the import pricing trend continues to be up. Another reason is the high-paying European market with which the US market has to compete for available Chinese rod exports.