US wire rod offers trailing scrap prices downward
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Under pressure from both soft demand and falling scrap prices, US domestic wire rod offers have weakened further in the past week.
ON the whole, US domestic low carbon wire rod offers have decreased by approximately $0.50 cwt. ($11/mt or $10/nt) since last week with most offers now ranging from $28.00 cwt. to $29.00 cwt. ($617/mt to $639/mt or $560/nt to $580/nt) ex-mill, with some offers even heard at slightly under this range. And with US shredded scrap prices falling by $25/long ton this month with potential to drop even further, the price trend for domestic wire rod remains down as well.
As regards wire rod demand, with the fourth quarter doldrums underway there aren't expected to be many improvements for any long products for the duration of the year, and wire rod is no exception. Though it is arguably stronger than rebar, consumption remains subdued and no one wants to build inventory in the fourth quarter, especially when prices continue to slip. Mill sources report that the larger US wire companies continue to buy at least some rod, the bulk of which is domestically obtained, though only in negligible quantities.
There remains less downward price pressure for import rod offers to the US; in fact, both Chinese and Turkish sources have slightly raised their offers in the past couple of weeks, due, in part, to the lack of relief that producers in those regions are getting on the raw materials side. Still, there remain few if any import bookings of wire rod concluded this month, and the pricing trend for import rod remains neutral as weak demand is counteracting the higher price expectations of producers. Additionally, there are more players in market now as demand in other world markets, including Mexico and Europe, remain soft.
Since last week, most Chinese offers of mesh quality wire rod have remained at a range of $25.00 cwt. to $26.00 cwt. ($551/mt to $573/mt or $500/nt to $520/nt), while Turkish offers still range from $25.50 cwt. to $26.50 cwt. ($562/mt to $584/mt or $510/nt to $530/nt). (Both offers are duty-paid, FOB loaded truck in US Gulf ports.) Mexico, though excluded from the US market by antidumping duties on sizes of 5.5 mm and larger, is currently offering some 4.75 mm rod to the US at prices similar to the abovementioned Turkish range, delivered to Houston. Additionally, traders report that there is some Italian rod on the ground in Houston offered at south of $25.00 cwt.
In other US wire rod import market news, the US Department of Commerce (DOC), on Tuesday announced the preliminary results of its administrative review of the antidumping (AD) order against carbon and certain allow steel wire rod from Trinidad and Tobago - namely, ArcelorMittal's Trinidad and Tobago unit. The DOC's revised preliminary dumping margin for ArcelorMittal Trinidad as announced Tuesday is 23.95 percent, which is sharply up from its current dumping duty deposit rate of 1.56 percent. (The current dumping duty deposit rate will remain in effect until the DOC's final results are published in the Federal Register.) The review covered the period from October 1, 2007 through September 30, 2008.
Although Trinidad & Tobago is no longer the US' primary import source for the drawing-quality rod covered in this order, as it has been replaced by Latin America and, to some extent, Turkey, in recent years, the revised duty rate should still have an impact on ArcelorMittal, and with retroactively applied duties, could potentially result in millions of dollars in losses for the firm. Plus, with ArcolorMittal's Georgetown rod mill still closed, Trinidad could have been a suitable option to service customers in the Gulf and Southeast. Currently, Trinidad has better markets to dispose of its production than the US, as the Latin American market is doing remarkably better than its big neighbor to the north.