Shredded scrap's sideways trend this month is not doing US wire rod mills any favors; current spot prices are under enough pressure as it is.
While there wasn't much chance that even a small boost in this month's scrap prices would support the $1.00-$1.50 cwt. ($22-$33/mt or $20-$30/nt) price increase US domestic wire rod mills announced for July, industry insiders predicted that it would at least lessen some of the pressure on current spot prices. Now that shredded scrap pricing has remained neutral in the Midwest and East Coast, mills have not only abandoned hope for the increase, but they are focusing extra effort on keeping current spot prices of $37.50-$38.50 cwt. ($827-$849/mt or $750- $770/nt) ex-Midwest mill firm.
In addition to the usual summer slowdown, already--weak activity in end-use sectors-especially the ever-lagging US construction industry--will still exert pressure on the US wire rod market. And with no clear speculation for August scrap trends apparent, sources tell SteelOrbis that there's a slight chance that spot prices might even soften a bit this month, depending on how hard mills put their collective foot down.
At least for now, US mills are not facing much pressure from import competition, as most import offers from Turkey are still hovering around the bottom of the $37.25-$38.25 cwt. ($821-$843/mt or $745-$765/nt) DDP loaded truck in US Gulf ports range. Last week, some US traders expected that Turkish mills might widen the scant $0.25 cwt. ($6/mt or $5/nt) margin between import offers and US domestic spot prices in response to a weak US market, but reports of increasing billet prices in Turkey have reversed those predictions. Turkish mills might not necessarily raise wire rod offers to the US on the heels of the billet increase, but it is no longer likely that they will drop them. Therefore, import activity in the US wire rod market will probably remain quiet through the rest of this month.