After a long string of decreases, one of the US' largest import wire rod suppliers, Turkey, is trying to raise its prices. However, it does not seem too likely that US customers will accept any kind of increase, as import sales prices from traders continue to deteriorate.
After lowering prices slightly in the beginning of last week, Turkish longs mills have since raised their asking prices, which sources say is to reflect the weakened US dollar and bottoming out of scrap prices. But given the continued weak steel demand and slack economic conditions in most of the world, the markets may not be ready for an increase. It seems particularly unlikely that US rod customers would accept an import price hike as domestic offers have become much more competitive and continue to trend down.
In fact, despite the attempts by Turkish mills to raise prices, since last week, traders' offers for Turkish-sourced wire rod to US customers have dropped by about $0.50 cwt. ($11 /mt or $10 /nt), with most offers now ranging from approximately $22.50 cwt. to $23.50 cwt. ($496 /mt to $518 /mt or $450 /nt to $470 /nt) duty-paid, FOB loaded truck in US Gulf ports.
The decrease in import sales prices in the US while foreign mills are trying to raise prices seems to reflect traders' lack of confidence that the Turkish price hikes will stick. "This may just be wishful thinking on the part of the Turkish mills," said one longs trader this week. "It seems like they are looking for any reason to get prices up."
While it remains to be seen whether Turkish mills will be successful in booking any orders at the new price level, for now, the overall pricing trend for import wire rod is still slightly down based on the lack of demand. Turkish mills may not get the price they want but this move may also signal the new bottom for import pricing until further developments.
Meanwhile, the domestic price range for US wire rod has remained relatively stable since last week, although mills are still approaching every deal on an individual basis, with large orders being able to command the best prices, and may price-match imports if need be. Aside from special discounts, the domestic mill asking range for low carbon rod remains at about $25.00 cwt. to $26.00 cwt. ($551 /mt to $573 /mt or $500 /nt to $520 /nt) ex-mill.
On the bright side, with next to no big orders being booked, customer destocking activity is still progressing, albeit at very slow rates. Mills remain disciplined and are operating at about 40 percent capacity, which many say is much more than demand has dropped. One of the major US mills - ArcelorMittal Georgetown - is currently shut down entirely and will not restart until the beginning of next month. With so much capacity being taken out of the market, once the economy starts to recuperate and steel demand starts to edge upwards again, the market will likely be in store for a surprising reversal.