The US wire rod market continues to weaken, as domestic producers push out their rollings to compensate for their high inventory levels.
Although domestic wire rod mills are still trying to maintain their prices, some mills are reportedly shutting down their rolling operations for a few days here and there because their lack of sales as of late has taken its toll in the form of high floor stocks.
In addition, with shredded scrap dropping by about $100/long ton since last month, it is very unlikely that the rod mills will be able to keep their prices stable for much longer. At present, domestic mills are mostly full through mid-November, but they are not pushing for more orders since to get business they'd have to slash prices.
When it comes to booking deals for late November and beyond, the mills will have to lower prices, if not officially then in the form of discounts. The weak demand, the major drop in raw material costs and aggressive import offers will leave them no other choice.
For now, most domestic offers for low carbon rod range from $51.50 cwt. to $52.50 cwt. ($1,135 /mt to $1,157 /mt or $1,030 /nt to $1,050 /nt) ex-mill. The pricing trend is strongly down.
On the import side, offers from China and Turkey continue to soften, with the Turkish mills being especially aggressive. One trader told SteelOrbis this week, "The Turks, at this point, will do almost any price."
Mesh quality import rod offers have fallen to a range of $40.00 cwt. to $41.00 cwt. ($882 /mt to $904 /mt or $800 /nt to $820 /nt) duty-paid FOB loaded truck in US Gulf ports.
The pricing trend for import rods is also strongly down, since with the halt in purchasing activity from the Middle East and recent global economic troubles, foreign mills' offers will only get more aggressive until the market finally bottoms out. Unfortunately, the bottom is not in sight quite yet.
With the global steel prices weakening faster than the domestic prices, the US may start to see an up-tick in import steel arrivals over the next several months. License data from the US Steel Import Monitoring and Analysis System (SIMA) show that, while wire rod import licenses from China totaled 8,247 mt in September, in just the first week of October rod licenses from China totaled 26,033 mt. Though the actual Census Data may reflect slightly different numbers, this surge in import licenses is a good indicator that a strong increase in import rod arrivals from China is likely.
Total import License Data for wire rod in September show 65,749 mt (compared to Census Data of 67,050 mt in August), with the largest sources being Canada, at 27,407 mt; Brazil, at 10,451 mt; Japan, at 8,255 mt; China, at 8,247 mt; and Turkey, at 4,331 mt. The reappearance of Turkey as a wire rod import source is also significant - the US hasn't seen a statistically significant amount of wire rod imports from Turkey since June.