As expected, US rod mills have announced significant price increases for June, bringing the domestic rod numbers closer to import price levels.
ArcelorMittal told customers that it will raise rod prices by $60 /nt ($66 /mt or $3.00 cwt.) as of June 1, matching Ivaco Rolling Mills' increase. Keystone Steel and Wire announced a slightly higher price hike of $70 /nt ($77 /mt or $3.50 cwt.), to go into effect as of May 19 (though sources say Keystone's price had been slightly under that of ArcelorMittal's, and their offering numbers are now at the same level). While shredded scrap numbers only rose by $10 /nt ($10.50 /mt or $0.50 cwt.) this month, the market situation was obviously strong enough for mills to raise prices far and above their raw material cost increase.
Currently, it is too soon to tell whether or not these full increases will go through, though with short rod supplies in the market right now, it is very likely that customers will accept the increases in full, and that prices will continue to rise further next month. In the past week, domestic rod spot prices have increased by approximately $1.50 cwt. ($33 /mt or $30 /nt), bringing the average market offers for low carbon to a range of $50.00 cwt. to $51.00 cwt. ($1,102 /mt to $1,124 /mt or $1,000 /nt to $1,120 /nt) ex-mill, and high carbon offers to a range of $52.50 cwt. to $54.50 cwt. ($1,157 /mt to $1,202 /mt or $1,050 /nt to $1,090 /nt) ex-mill.
Domestic mills are said to be very full due largely to the absence of import buying options. However, with the lackluster demand from end-use businesses, mills do not want to take the risk adding a shift and ramping up their production to its full capacity. Wire drawers, on the other hand, are unhappy about the current situation, as the tight supply situation is a main factor for their rising costs. Customers will be glad to know though, that ArcelorMittal has postponed the scheduled maintenance shutdown of its Georgetown mill to August (it had originally been scheduled for May).
On the import side, very little material is coming through the pipeline. There are some rod offers of Chinese origin, available at slightly under the new domestic prices, ranging from $49.00 cwt. to $50.00 cwt. ($1,080 /mt to $1,102 /mt or $980 /nt to $1,000 /nt) FOB loaded truck in US Gulf ports. However, there is not too much availability, and there is some question among buyers about the quality of these rods. Also, the pricing trend for Chinese rod offers continues to be strongly up, as Chinese mills are expected to come out with a new round of higher prices imminently.
Another usual rod import source for the US, Turkey, is currently not offering to the US at any reasonable levels. Though there are no rod offers from Turkey currently being booked, license data from the US government show that in April, Turkey was the US' largest source of import rod after Canada, accounting for 35,766 mt (Canada's tonnage totaled 38,189 mt).