Although US domestic wire rod mills were reportedly “ready and willing” to aggressively push their latest price increase into the market, sources tell SteelOrbis that optimism for full absorption has waned. The $2.25 cwt. ($45/nt or $50/mt) increase became effective with shipments as of today, yet there are no reported increases in spot prices. Part of the “change of heart,” as one source put it, is the expected sideways-to-down trend in US domestic scrap prices this month, along with less-than-robust demand for wire rod in the US.
Additionally, expectations that competition within the US domestic wire rod market would tighten—and result in increased price discipline—as Gerdau sells off its US assets were dampened with news this week that the company sold its Texas wire rod mill and two downstream wire product facilities to Optimus Steel instead of another major mill like SDI, Nucor, or CMC.
However, some sources say that other market factors might still work in US wire rod mills’ favor, including import wire rod arrivals that are still relatively subdued, and offer prices for future arrivals that are currently too close to US domestic spot prices to be competitive. Plus, demand is expected to improve slightly as the spring construction season gets under way.
Whether positive market factors can cancel out negative factors and lead to full absorption of the February wire rod increase remains up for debate. For now, US domestic wire rod spot prices are stable in the range of $33.25-$33.75 cwt. ($665-$675/nt or $733-$744/mt) ex-mill.