Wire rod offers from overseas have dropped, while the domestic wire rod market remains stuck in neutral.
Recently, US wire customers purchased most of their wire rod domestically, as foreign offers were either too expensive or not inexpensive enough to compensate for long lead times. However, scrap prices in Turkey took a sharp downturn this week, resulting in wire rod prices lowering by about $1.00 cwt. ($22/mt or $20/nt). Offers now match the domestic wire rod range of $32.00 cwt. to $33.00 cwt. ($705/mt to $728/mt or $640/nt to $660/nt) duty paid, FOB loaded truck in US Gulf ports. This surprising move has been attributed to the gap between rapidly rising steel prices and demand finally reaching a breaking point.
The Turkish scrap situation hasn't yet translated to Chinese offerings, but that's expected to change in the near future. For now, Chinese wire rod mills are not that interested in making attractive offers, and have held pricing in the range of $32.00 cwt. to $33.00 cwt. ($705/mt to $728/mt or $640/nt to $660/nt) duty paid, FOB loaded truck in US Gulf ports.
On the domestic side, many US wire rod buyers are waiting on the sidelines after getting spooked by domestic scrap's recent sideways move, in addition to rumors that pricing might go down in May. If that rumor comes to pass, domestic mills are not expected to lower prices, as they are still working under limited capacity and are in no position to give up the gains they achieved with recent price increases. Even so, the recent neutral trend in both scrap and wire rod pricing is widely thought to be a temporary situation, and scrap pricing is expected to go back up as early as June. Currently, US mills are still offering wire rod in the range of $32.00 cwt. to $33.00 cwt. ($705/mt to $728/mt or $640/nt to $660/nt) ex-Midwest mill, and even though buyers are reluctant to purchase more than what is needed at the time, there are not many deals being made.
Domestic demand is still experiencing growth spurts, but overall, the wire rod business is looking up despite the current hesitancy of end-users. Recent press releases regarding quarterly results for wire companies show that most are reporting net income after many quarters of net losses. Additionally, new mills are starting up production, such as Nucor's new rebar and wire rod mill in Arizona that opened last week.