With another price increase imminent, low domestic wire rod spot prices are drying up as mills become less likely to cut deals.
Although current expectations for January's shredded scrap increase are still in the ballpark of $40-$50/long ton, SteelOrbis has learned that wire rod prices are expected to increase by up to $3.00 cwt. ($66/mt or $60/nt). In anticipation, US mills are taking a cautious approach to pricing, offering little to no deals below the current average spot price of $34.50 cwt. ($761/mt or $690/nt) ex-Midwest mill (a $0.50 cwt. increase from last week). Mills might not be able to push through the entire expected $3.00 cwt. increase, but they will likely get at least $2.00 cwt. ($44/mt or $40/nt) of it, pushing February spot prices beyond the current asking price range $35.50-$36.50 cwt. ($783-$805/mt or $710-$730/nt) ex-Midwest mill.
Import prices, meanwhile, have not exactly increased over the week, but prices at the lower end of the $33.50-$34.50 cwt. ($739-$760/mt or $670-$690/nt) duty paid FOB loaded truck in US Gulf ports range are not available any longer. Turkish wire rod mills have been paying higher prices for scrap in the last week or so, but they are reluctant to increase their import offers to the US, because until US price announcements are released, import offers are not distanced enough from US spot prices to be worth risking a price hike-according to industry insiders, Turkish mills are more concerned with maintaining market share in the US than expanding profit margins at this point in time.
The opposite effect was evident in October, when Turkish mills held onto their prices as US spot prices fell. Shipments of wire rod from Turkey in December only totaled a negligible 97 mt, well below November's total of 829 mt and far beneath the country's 2010 monthly average of 14316 mt, according to the US Import Monitoring and Analysis System (SIMA). Overall, US imports of wire rod fell in December from November. According to license data from SIMA, the US imported 71,877 mt of wire rod in December, an approximate 14 percent drop from November's total of 82,954 (preliminary census data).
Elsewhere, shipments from Canada only dropped slightly month-on-month (28,836 mt in November and 26,474 in December); imports from Japan and South Africa dropped as well (14,034 mt and 13,668 mt in November, and 4,993 mt and 1,496 mt in December, respectively); while imports from Brazil and Mexico increased (9,184 mt and 7,332 mt in November, and 11,530 mt and 15,084 mt in December, respectively).
