With speculation swirling about another sideways-to-down scrap trend in August, the already-vulnerable US wire rod market could see an adjustment soon.
Spot prices in the US domestic wire rod market have maintained their neutral trend over the last week, but early scrap predictions for August point to more difficulty ahead for mills wishing to keep the market level. Current spot prices for most orders are still in the range of $37.50-$38.50 cwt. ($827-$849/mt or $750- $770/nt) ex-Midwest mill. However, sources tell SteelOrbis that some mills might be flexible for much-needed large orders, as most wire rod buyers are still purchasing on an as-needed basis. As with last week, there is still no indication that any portion of the $1.00-$1.50 cwt. ($22-$33/mt or $20-$30/nt) price increase announced for July has been absorbed in the market.
If shredded scrap pricing moves sideways to down in August as early speculation indicates, wire rod mills will have to rely on demand to keep their price levels intact. US Census Bureau data released Tuesday showed that housing starts in June increased 14.6 percent and building permits increased 2.5 percent (both month-on-month), but considering the rollercoaster pattern in starts and permits seen over the course of the year so far, the currently positive construction trend might not be sustainable.
Looking offshore, Turkish mills do not seem to be taking the lackluster US market into consideration when setting wire rod export prices--in the last week, offers to the US have increased by $0.75 cwt. ($17/mt or $15/nt) following an uptrend in billet prices, putting import prices into the range of $38.00-$39.00 cwt. ($838-$860/mt or $760-$780/nt) DDP loaded truck in US Gulf ports. However, US buyers were not entirely interested in prices before the increase, and will thus not pay much attention to offers now.