As anticipated, US wire rod producers have informed customers of a price increase for August shipments, led by ArcelorMittal at $60 /nt.
ArcelorMittal will raise prices by $60 /nt ($66 /mt or $3.00 cwt.) for shipments as of August 1, and will also add a $20 /nt surcharge for 5.5 mm and 7/32-inch rods. Other domestic mills are expected to follow ArcelorMittal's lead.
For July shipments, as previously reported, most domestic prices range from $54.00 cwt. to $55.00 cwt. ($1,191 /mt to $1,213 /mt or $1,080 /nt to $1,100 /nt) ex-mill for low carbon rods, while high carbon offers range from $56.50 cwt. to $57.50 cwt. ($1,246 /mt to $1,268 /mt or $1,130 /nt to $1,150 /nt) ex-mill. If the August increase takes hold, prices will be pushed up by another $3.00 cwt. from the above levels. Even after the August price increase takes effect, the pricing trend for domestic rod prices will continue trending up in the near term, due to the rising import prices, lack of supplies, as well as producers' rising raw material costs.
Needless to say, wire makers are not happy about the increase, but at the same time, they do not have any alternative but to pay it. Some wire drawers indicate that their customers simply cannot pay for the rod increases anymore; still, most wire drawers have been accepting the increases so far because their only alternative is to go out of business, as they are not able to procure import rods at a cheaper price. It is likely that wire drawers will accept this most recent increase for lack of a better alternative, though it is foreseeable that there may come a point when customers say "enough is enough."
Adding to US rod customers' woes are reports of persisting production problems in various US wire rod mills. The recent two-week outage of Gerdau in Beaumont, Texas is just one example. ArcelorMittal's Georgetown operation lost production recently as well, and reports of more production curtailments in other US rod mills for Q4 have surfaced.
Meanwhile, import rod prices continue their ascent. Most traders' offers for Chinese rod (boron-added) have not changed in the last week, but as predicted last week, Chinese mills are starting to raise their prices to the tune of $1.00 cwt. ($22 /mt or $20 /nt), which will eventually be reflected in sales prices for US customers. For now, most offers continue to range from $55.50 cwt. to $56.50 cwt. ($1,224 /mt to $1,246 /mt or $1,110 /nt to $1,130 /nt) FOB loaded truck in US Gulf ports, not including the potential tax increase that the Chinese government may impose on boron-added rods, which the traders would have to split with the supplying mill.
As for non-boron-added rod imports, there are none to speak of; some Chinese mills are offering but the prices are way too expensive to gain any interest.