Wire rod import prices in the US have continued their steep decline in the last week, with offers falling by as much as $4.00 cwt. ($88/mt or $80/nt).
Most mesh-quality import wire rod offers in the US now range from approximately $32.00 cwt. to $33.00 cwt. ($705 /mt to $728 /mt or $640 /nt to $660 /nt) duty-paid, FOB loaded truck, in US Gulf ports.
With mills in China and Turkey continuing to cut their export prices, traders might be able to offer at even below the above range, based on the current CFR numbers. However, there is very little back-to-back business taking place right now. Some traders do have some unsold positions on hand, but they are generally taking a disciplined approach and trying to keep their tons from devaluing.
On the sales side, things are also extremely slow. One rod trader told SteelOrbis this week, "Nobody's buying right now unless they absolutely have to. Everyone is just waiting for this thing to bottom out."
SteelOrbis hears that Chinese rod offers are still slightly above Turkish offers, but that the gap between the two import sources has narrowed. The Chinese market is just as weak as the Turkish market, but Chinese prices are still slightly higher since the mills are iron ore based rather than scrap based.
Recently released Preliminary Census Data from the Steel Import Monitor and Analysis System (SIMA) show that wire rod imports to the US rose in September from August. In September, rod imports totaled 81, 826 mt, still below the September 2007 level of 89,833 mt, but slightly over the 70,449 mt imported in August 2008. The US' largest import rod sources in September were: Canada, at 29,978 mt; Turkey, at 18,510 mt; China, at 12,592 mt; Japan, at 8,247 mt; and Brazil, at 7,398 mt.
As for US domestic rod prices, after falling in line with October's shredded scrap price decreases earlier this month, most offers are still at approximately the same range as last week, with low carbon at about $45.00 cwt. to $46.00 cwt. ($992 /mt to $1,014 /mt or $900 /nt to $920 /nt) ex-mill.
However, while domestic prices have not weakened further in the past week, sources say that they are not booking any orders at this price level. Mills are reportedly booked through the first part of November, but that's it. If they want to book orders for the second part of November and for December, they will probably have to lower prices further to be more competitive with the import numbers.
Mills are cutting production in response to the weak demand and to conduct their usual fourth-quarter maintenance projects. Keystone Steel, for example, is in the middle of a 3-week shutdown. However, with almost no demand, it is not yet clear to what extent these cutbacks will be able to help the market recover. Then again, once the panic in the market eventually subsides and prices start to trend up again, the relatively low inventories and pent-up demand could cause prices to skyrocket upwards. For now, though, the pricing trend is still down.