Despite very little assurance that any increase in wire rod prices will be accepted, at least one major mill announced a significant price hike--and other mills won't be far behind.
The last increase announced by domestic wire rod mills, a $1.00 cwt. ($22/mt or $20/nt) bump for December shipments, was largely ignored by the wire rod buying public. Mills still tried to push up asking prices, but as of last week, spot prices were still hovering around $31.50 cwt. ($694/mt or $630/nt) ex-mill-the same level as mid-November, and still lagging behind the new mill asking range of $32.50-$33.50 cwt. ($717-$739/mt or $650-$670/nt) ex-mill.
But earlier this week, at least one major US wire rod mill announced a jaw-dropping $3.00 cwt. ($66/mt or $60/nt) transaction price increase, effective with shipments after January 1, 2011. The move was partially in response to the $45/long ton increase in scrap announced Monday, but also an attempt to finally drive up spot prices that have been languishing at lower levels for weeks. Other major mills are expected to follow suit, but solidarity between mills won't make a difference. There is virtually no chance wire rod buyers will accept the increase, which means there will probably not be a flurry of purchasing activity ahead of it. Most future purchases will be made to fill inventory holes, and at least until the end of the year, spot prices will likely remain close to the current $31.50 cwt. ex-mill average, if not slightly above.
As for imports, Turkish wire rod prices are stable for the moment, but there is no clear indication of how overseas mills will react to the US price increase. Typically, they would raise prices as well, and considering that Turkish mills have held off raising import prices to the US lately, despite their own rising raw material costs, it would seem like a good time to finally make a move. But if it becomes clear that US mills are unable to place orders at their higher prices, Turkish offers might only rise marginally, if at all. But for now, prices are still in the range of $31.50-$32.50 cwt. ($694-$717/mt or $630-$650/nt) duty paid FOB loaded truck in US Gulf ports, which, for many US buyers, is still considered too high.