Although the new shredded scrap price level for June is yet to be determined, there are rumors in the US wire rod market that domestic rod prices will register a moderate increase in July.
While many scrap players do not expect shredded scrap prices to move up in June, wire rod insiders say there are rumors that domestic rod mills are already planning to raise their prices by about $50 /nt ($55 /mt or $2.50 cwt.) for July shipments.
One buyer told SteelOrbis this week that while producers probably won't be able to cite raw material costs as the reason for the increase, "the main reason for a July increase is that they can. They still have room to catch up with the global prices, and there is still not much coming into the US in terms of imports."
Meanwhile, spot prices for domestic rod have registered an increase of approximately $1.00 cwt. ($22 mt or $20 /nt) in the past week, reflecting the full implementation of the mills' June price increase. Most domestic low carbon offers now range from $51.00 cwt. to $52.00 cwt.($1,124 /mt to $1,146 /mt or $1,020 /nt to $1,040 /nt) FOB loaded truck, in US Gulf ports, while high carbon offers range from $53.50 cwt. to $54.50 cwt. ($1,179 /mt to $1,202 /mt or $1,070 /nt to $1,090 /nt) FOB loaded truck, in US Gulf ports.
The pricing trend for domestic rod remains up for July, but there are still some indications that the market will start to cool off this summer as more import arrivals from China start to appear and scrap prices level off. Wire companies say that end-use demand is not bad, but it is not good either, and that with the housing market expected to stay depressed for at least the next year, no big up-tick in end-use demand is expected.
On the import side, China is still the only major source offering rods to the US, and the pricing level for these mesh-quality rods remains at the same level as last week, at approximately $51.50 cwt. to $52.50 cwt. ($1,135 /mt to $1,157 /mt or $1,030 /nt to $1,050 /nt) FOB loaded truck in US Gulf ports, with an extra of about $0.75 cwt. ($16.50 /mt or $15 /nt) for 5.5 mm.
The pricing trend for import rods is strongly up, as there are strong indications of a major price increase out of China to take place this week. Traders say that the Chinese mills realize how far behind their prices are compared to offers from mills in other regions, like Turkey, and plan to raise their numbers accordingly. Although Turkish offers are currently too high-priced for US traders to entertain, if the domestic mills are able to push up their prices another $50 /nt, then Chinese mills may be able to achieve a similar price increase.
In other US wire rod news, the workers at Cascade Rolling Mills' McMinnville, Oregon melt shop, which staged a temporary strike a few weeks ago, have ratified a new, three-year labor contract with the mill, putting to rest fears of further reduction in domestic wire rod production capacity.