Despite the hope that the US wire rod market would have started to show at least some signs of recovery by now, as of the middle of the first quarter of 2009, the market is still pretty dead. And unfortunately, it is starting to look like things could possibly get even worse before they get better.
There is still, as one trader put it, "nothing going on" in the US wire rod market on either the domestic or the import fronts. In fact, due to the lack of activity and the mills' desperation to get orders, it is hard to even determine an official market price. While most domestic low carbon offers are still at about $29.00 cwt. to $31.00 cwt. ($639 /mt to $683 /mt or $580 /nt to $620 /nt) FOB mill, buyers say that large orders, or even just some strong persuasion and the prospect of a firm order, can command prices that are somewhat below this range.
Whereas several weeks ago at the start of the New Year, US rod producers were more optimistic that they would be able to hold prices firm, now, in the continued absence of demand, prices have become more negotiable.
On the import side, things aren't any better. With the growing desperation of Turkish mills to drum up some orders, Turkish wire rod offering prices for the US have dropped further this week, resulting in sales prices for import Turkish rod in the US falling by approximately $0.75 cwt. ($16.50 /mt or $15 /nt) in the last week.
Most import offers can now be found at a range of about $24.75 cwt. to $25.75 cwt. ($546 /mt to $568 /mt or $495 /nt to $515 /nt) duty-paid, FOB loaded truck in US Gulf ports. And due to the lack of business, not just from the US but around the world, and the increasingly bleak economic forecast, the pricing trend for import rod is still pointing downward.
On a more positive note, the Chinese market is still holding its own due to the increased steel demand for national infrastructure projects, and Chinese mills have yet to make a reappearance in the US wire rod market. Also, on the whole, despite the increase of wire rod imports from Turkey in January, total wire rod imports were down in January from both December 2008 and from January of the previous year. License data from the US DOC show that wire rod imports totaled 76,532 mt in January, compared to 93,443 mt in December and compared to 87,139 mt in January 2008.
Furthermore, license data for the first half of February show an even bigger drop in import arrivals. Data collected though February 17 show wire rod imports totaling only 16,684 mt. Despite the overriding lack of demand, the seeming slowdown in imports should help keep supplies at a minimum.