Turkish wire rod offers for the US, which for a brief period appeared to be commercially feasible, have registered another price increase and may once again be too expensive for US buyers to commit to.
Still, in the absence of Chinese rods, there is very little import competition, and prices may go up again in the coming weeks.
Cost and freight (CFR) prices for wire rod offers from Turkey to the US have gone up in the past week, though these higher numbers have not yet been reflected in sales prices for customers. They are, however, expected to push up sales prices by next week, with these numbers possibly rising another $0.50 cwt. or so to reflect the $10 /mt increase in CFR prices.
Currently, most import mesh quality wire rod offers in the US still range from $31.00 cwt. to $32.00 cwt. ($683 /mt to $705 /mt or $620 /nt to $640 /nt) FOB, loaded truck, in US Gulf ports, while drawing quality offers range from $32.75 cwt. to $33.75 cwt. ($722 /mt to $744 /mt or $655 /nt to $675 /nt) FOB, loaded truck, in US Gulf ports.
Turkey is still the most competitive wire rod import source for the US, and with Turkish prices higher than domestic, buyers are not committing to purchase much tonnage yet. In addition to Turkey, some Western European mills have started showing interest in the US market due to the extremely weak conditions in the north of Europe and the fast-approaching cold holiday months.
US wire rod buyers are now faced with the dilemma of whether or not to commit to imports when they are priced higher than domestic offers; however, some wire drawers are genuinely concerned that there may not be enough rods to go around come February or March 2008. The pricing trend for import wire rod remains slightly up, and by the time the procrastinators decide to buy imports, current offers may no longer be available.
Final census data from the US Import Administration show that wire rod import tonnage is down significantly, year-on-year. The data show that YTD through September, wire rod imports in the US totaled 1,171,788 mt, compared to 2,148,840 mt imported during the same period of last year. The US' top wire rod import sources from January through September 2007 were: China (521,531 mt), Canada (250,122 mt) Brazil (109,019 mt), Trinidad & Tobago (80,671 mt), and Japan (80,561 mt).
As for domestic wire rod prices in the US, due to the four-day Thanksgiving holiday last week, no noticeable movement has taken place in the market since our last report. The pricing trend for domestic rods is still up though, as mills are expected to increase prices further in the first quarter. Currently, mills still are not quoting for the first quarter yet, hoping that the increases they announced will stick despite the weak consumption conditions.
This week, domestic low carbon wire rod offers continue to range from $30.50 cwt. to $31.50 cwt. ($672 /mt to $694 /mt or $610 /nt to $630 /nt) FOB mill, while high carbon offers range from $33.00 cwt. to $34.00 cwt. ($728 /mt to $750 /mt or $660 /nt to $680 /nt) FOB mill.