The US wire rod market has softened slightly since last week, as import offers have started to weaken and domestic mills have become more flexible on their offer pricing as well.
US wire rod producers seem to have resigned themselves to the fact that they will not be able to achieve the full price increase they tried to push through this month, slight as it was. Due to the general lack of demand for wire rod combined with the falling scrap prices, US domestic low carbon wire rod offers have fallen by approximately $0.50 cwt. ($11/mt or $10/nt) since last week, with most offers now ranging from $28.50 cwt. to $29.50 cwt. ($628/mt to $650/mt or $570/nt to $590/nt) ex-mill. The pricing trend remains slightly down as demand is weak going into the typically slow holiday season, and after dropping in the first half of October, US scrap prices are still headed in a downward direction.
There are still a few silver linings for the US wire rod market, however. The main one is the low amount of supplies in the market, which is contributed to by this year's drastic drop in domestic wire rod production as well as the continued low wire rod import volumes. There is also some preference in the longs markets for domestic product over import, the obvious one being the ability to purchase smaller, quicker orders from the domestic mills than from foreign, but also due to the fact that DOT construction projects related to the stimulus package require the use of US-made steel.
Nevertheless, with overall demand remaining weak, the main bright spot for US wire rod right now is that supplies are on the tight side and customers are not building inventories. It remains the case, though, that large buyers will be able to continue to get discounts through the near-term, and the weakening scrap and import markets will not help things either. Therefore, the pricing trend for domestic rod remains slightly down.
On the import side, offers of mesh-quality Turkish rod for the US have dropped by about $1.00 cwt. ($22/mt or $20/nt) since last week, with most offers now ranging from $26.00 cwt. to $27.00 cwt. ($573/mt to $595/mt or $520/nt to $540/nt) duty-paid, FOB loaded truck in US Gulf ports. This drop occurred as Turkish mills have lowered their asking prices in line with their falling raw material costs and the soft demand they are seeing from their export longs markets.
Additionally, import sales prices for Chinese (boron-added) low carbon rod are now achievable at the same level as the Turkish offers, after softening for the past several weeks. However, traders comment that there have been no bookings of Chinese material and that not all Chinese mills have lowered their price to a competitive level. Still, if import offering prices continue to fall, this may drive the US domestic price down further as mills seek to protect their market share, especially now that China has the potential to re-enter the market.