As wire rod trends up overseas, domestic wire rod mills might find more leeway to raise prices despite the anemic response to their last price increase.
Scrap pricing in Turkey firmed up in the last week, raising the price for wire rod imports to unattractively high levels. New offers this week have been heard at about $0.50 cwt. ($11/mt or $10/nt) higher than last week, bringing mesh-quality Turkish rod into the range of $30.00-$31.00 cwt. ($661-$683/mt or $600-$620/nt) duty paid, FOB loaded truck in US Gulf ports. Because most US wire rod buyers are set for import shipments through the fourth quarter, they are not too concerned with the price situation overseas.
South of the border, wire rod prices are also ticking up, with major Mexican mills announcing price increases in direct response to higher raw material costs. While most increases are likely to be made on a case-by-case basis, the general idea is that prices will rise approximately $1.00-$1.35 cwt. ($20-$30/mt or $18-$27/nt), bringing offers above the $30.00 cwt. ($661/mt or $600/nt) mark.
Because US mills realize there is not much current competition with foreign mills, they are in a better position to set prices at their own desired levels, despite the sluggish acceptance of their last price increase. The nearly industry-wide expectation is that mills will not go for the full scrap hike, but raise prices by about $1.00-$1.25 cwt. ($22-$28/mt or $20-$25/nt). For now, domestic prices have not changed much in the last week, with official asking prices still in the range of $31.50-$32.50 cwt. ($683-$717/mt or $630-$650/nt) ex-mill. As for the predicted scrap increase, ideas are still in the range of $30-$50/long ton ($1.35-$2.25 cwt. or $27-$45/nt).
The effect of imported wire rod's gradual upward price trend, starting in mid-June, can be seen in the latest import license data from the US Import Monitoring and Analysis System (SIMA). According to SIMA, the US only imported 104,587 mt of wire rod in August, compared to 111,610 mt in July (preliminary census data). Because the price margin between imported and domestic wire rod has narrowed since June, September import figures are expected to reflect another month-on-month decrease.
August imports were especially notable for the fact that Turkey surpassed Canada with wire rod exports to the US for the first time since October 2009. The US imported 29,263 mt of wire rod from Turkey in August, compared to 25,289 mt from Canada. Other notable sources of imported rod to the US in August were Mexico, with 13,765 mt; Japan, with 11,858 mt; Spain, with 6,198 mt; and Italy, with 4,504 mt. Excluding Canada, all of the aforementioned sources reflected month-on-month gains. However, Brazil, like Canada, posted decreased import tonnages in August, with a paltry 3,761 mt compared to 10,416 mt in July.
