US wire rod market – Import prices take another huge jump

Wednesday, 26 March 2008 13:31:52 (GMT+3)   |  
       

Offering prices from import rod mills to US traders continue to escalate, and prices for US customers will be significantly up as well once traders accept the new numbers.

These import offers have risen approximately $4.00 cwt. to $5.00 cwt. ($88 /mt to $110 /mt or $80 /nt to $100 /nt) in the past week. Based on the new foreign offers, mesh-quality rod prices from China for US customers will soon rise to a level of $47.50 cwt. to $48.50 cwt. ($1,047 /mt to $1,069 /mt or $950 /nt to $970 /nt) FOB loaded truck in US Gulf ports, while mesh-quality rod prices from Turkey for US customers will rise to a level of $49.50 cwt. to $50.50 cwt. ($1,090 /mt to $1,113 /mt or $990 /nt to $1,010 /nt) to FOB loaded truck, in US Gulf port.

Drawing quality rods from these sources are approximately $0.50cwt. ($11 /mt or $10/nt) more expensive. However, Turkey has shot so far ahead with their low carbon prices that some limited offerings of $44.50 cwt. to $45.50 cwt. ($981 /mt to $1,003 /mt or $890 /nt to $910 /nt) for drawing quality rods originating from the Caribbean / Latin America area are still distinctly under the new Turkish price level. At the present time, the international wire rod market has no structure and could be described as a "free-for-all."

US customers are not yet paying these higher prices, but it is only a matter of time until traders' cheaper inventories run out, and they will start charging their customers the higher prices that import mills are asking for.

Recently released Preliminary Census Data for imports in February from the US Import Administration show that foreign wire rod arrivals to the US remain very low, with China virtually absent from the market. A total of 69,909 mt of wire rod was imported in February 2008 (compared to 96,057 mt in February 2007), with the top import sources being: Canada, at 38,226 mt; Brazil, at 11,607 mt; Japan, at 9,387 mt; Trinidad & Tobago at 5,602 mt; and Germany, at 2,738 mt. China only accounted for 1,028 mt, compared to 16,899 mt in February 2007.

On the domestic side, no new price announcements have been made by US mills, but the pricing trend remains strongly up due to the short supplies and high-priced imports. End-use demand from wire rod customers, such as the chain link fence and mesh industries, is still not very strong due to the housing mess, but the lack of available domestic or import supply continues to drive the rod market upwards. Domestic lead times continue to be long, and Mittal Georgetown recently announced it will temporarily shut down next month for maintenance which will further add to the shortage.

Another reason that more price increases may be on the way is that US scrap prices are on the rise again and are expected to go up strongly in April. US rod mills will then undoubtedly raise their rod prices by a similar amount to recover their steelmaking costs.

For now, low carbon rod offers from domestic mills continue to range from $39.50 cwt. to $40.50 cwt. ($871 /mt to $893 /mt or $790 /nt to $810 /nt) FOB mill, while high carbon offers range from $42.00 cwt. to $43.00 cwt. ($926 /mt to $948 /mt or $840 /nt to $860 /nt) FOB mill, and mesh offers range from $38.50 cwt. to $39.50 cwt. ($849 /mt to $871 /mt or $770 /nt to $790 /nt) FOB mill.


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