The US wire rod market is singing "Silent Night" this holiday season, as neither sales nor production is showing much activity.
US rod mills have met the lack of demand with an equally forceful cutback in production capacity. As one trader put it, "The slow sales and production cutbacks have basically canceled each other out."
Most mills are either shutdown until after the holidays or only running at very limited capacity.
Because of the lack of sales activity and the production cutbacks, prices have not moved in the last two weeks, with most offers continuing to range from $32.00 cwt. to $33.00 cwt. ($705 /mt to $728 /mt or $640 /nt to $660 /nt) FOB mill. However, it remains the case that if mills are presented with large orders, they are willing to negotiate a lower price. The overall pricing trend is neutral.
Import rod activity also remains very quiet, with most new mesh quality rod offers from Turkey continuing to range from $26.75 cwt. to $27.75 cwt. ($590 /mt to $612 /mt or $535 /nt to $555 /nt) duty-paid, FOB mill, in US Gulf ports. There are still no competitive offers out of China. The general import pricing trend for wire rod offers to the US is also neutral, with no pick-up in orders expected until after the holidays.
On the wire side of the business, things are also very slow. As SteelOrbis reported last week, some US wire drawers have even been forced to sell their rod inventories because of financial difficulties. Faced with similar or even worse demand compared to that faced by the rod mills, wire drawers across the board have cut both capacity and prices significantly, and have also had to lay off workers.
The US rod market generally does not anticipate that the market will start to turn around until well into the first month of 2009 and, even then, a huge rebound is not expected. Mills are hopeful, though, that orders will start to pick up after the New Year, with the market seeing at least some revival in demand by spring.
In general, all players in the US wire rod market are hunkering down, waiting out this cold winter and hoping for brighter New Year.