Domestic wire rod mills have not seen many bookings based on their new asking prices, leading to speculation that prices might go down next month.
The official asking prices for domestic mills are still in the range of $33.00-$34.00 cwt. ($728-$750/mt or $660-$680/nt) ex-mill, but many view such ideas to be "wishful thinking". Many spot offers are still in the pre-increase range (from two weeks ago), at about $1.50 cwt. ($33/mt or $30/nt) less, with most around the $32.00 cwt. ($705/mt or $640/nt) mark. Spot prices might go down as soon as next week, however, as it becomes increasingly evident that scrap is on a downward trend. How steep the plunge will be still remains to be seen, but the previously speculated range of $10-$20/long ton (as of last week) has already widened into a $20-$40/lt spread. However, even if scrap prices don't fall to the steep end of the range, and settle near the $20/lt level, domestic wire rod mills might have no choice but to lower their official prices-or simply proclaim that current spot prices are the new asking prices.
While the October scrap situation is putting major pressure on domestic mills, demand for wire rod-especially in the construction-dependent mesh sector-is not doing much to help. Conditions are improving slightly, but what the industry needs is a strong shot in the arm. According to the Associated General Contractors of America, construction employment expanded in 56 out of 337 metropolitan areas between August 2009 and August 2010. "With construction employment on the mend in an increasing number of areas, it appears that the worst is finally over," said Ken Simonson, the association's chief economist. "The fact remains, however, that this industry has a long way to go before we see construction employment back to pre-recession levels."
Overseas, Turkish mills are seeing the same tepid response from US buyers. Local prices in Turkey have dropped in the last week, and even though the decrease hasn't entirely translated into official import offers, the most common prices are now in the lower end of the $30.00-$31.00 cwt. range ($661-$683/mt or $600-$620/nt) duty paid FOB loaded truck in US Gulf ports. However, a few offers have been heard of as low as $29.75 cwt. ($656/mt or $595/nt).