As the domestic price hikes start to take hold, wire rod spot prices in the US have moved up by another $1.50 cwt. ($33 /mt or $30 /nt) in the last week, with most low carbon offers now ranging from $48.50 cwt. to $49.50 cwt. ($1,069 /mt to $1,113 /mt or $970 /nt to $1,010 /nt) ex-mill, and high carbon offers ranging from $51.00 cwt. to $53.00 cwt. ($1,124 /mt to $1,168 /mt or $1,020 /nt to $1,060 /nt) ex-mill.
With scrap prices expected to trend slightly upward for at least the next month, the pricing trend for domestic rod continues to trend upward as well. Another factor that is keeping the domestic rod market tight is that mills are not running at full capacity and are keeping most customers on allocation. Wire drawers worry that if there was an interruption in service at one of the mills, they could possibly run out of rod completely
Along with their inventory worries, wire drawers continue to be pinched by the high rod costs in addition with the flat demand for wire, making it harder for them to pass along the increases to customers.
On the import side, some buyers are having no choice but to accept the offers from Turkish mills, which have risen to a level of $51.00 cwt. to $52.00 cwt. ($1,124 /mt to $1,146 /mt or $1,020 /nt to $1,040 /nt) FOB loaded truck, in US Gulf ports, for mesh quality. Chinese mesh quality offers have risen to a range of $48.00 cwt. to $49.00 cwt. ($1,058 /mt to $1,080 /mt or $960 /nt to $980 /nt) FOB loaded truck, in US Gulf ports, and customers are biting on these as well, though these offers are full of restrictions on sizes and grades.
Recently released preliminary census data from the US Import Administration show drops in import rod arrivals year on year, as well as the diminished presence of China in the market. Data show that the US imported a total of 73,486 mt of wire rod in March, down significantly from the 131,600 mt imported in March 2007. The US' largest import wire rod source in March 2008 aside from Canada, at 73,486 mt, was Brazil, which supplied 12,896 mt. Germany, at 11,994 mt; Japan, at 9,054 mt; and Trinidad & Tobago, at 6,000 mt were the other main wire rod sources in March 2008. Rod imports from China totaled only 14.8 tons in March compared to 51,422 mt in the same month of the previous year.
With raw material costs still on the rise worldwide, the pricing trend for import wire rod also remains strongly up, so, unfortunately, it doesn't look like wire drawers will catch a break in costs or availability anytime soon.
US wire drawers did get some good news this week: the US ITC announced last week its preliminary injury determination on steel threaded rods imported from China. The ITC determined with an affirmative vote of all six commissioners that there is a reasonable indication that the US has been materially injured by these imports. As a result of the ITC's affirmative decision, the US DOC will continue its antidumping investigations, with a preliminary decision slated for August 12. The result may very well keep out this commonly imported wire product and pave the way for further cases against Chinese wire product imports to come.