US wire rod market awaits yet another price hike

Most wire rod market players are now convinced that the domestic mills' $40 /nt ($44 /mt or $2.00 cwt.) April increase will go through, and that even more increases are on the way. Though wire rod demand is not overwhelming, mills have no choice but to ask for more increases to make up for soaring scrap costs. And after the latest surge in scrap prices in recent weeks - $60 to $70 /long ton for shredded - mills will likely raise prices again in May, or they might even tack on an additional increase for April prices. Most domestic low carbon wire rod offers in the market now range from $28.00 cwt. to $29.00 cwt. ($617 /mt to $639 /mt or $560 /nt to $580 /nt) FOB mill. High carbon continues to range from $28.50 cwt. to $29.50 cwt. ($628 /mt to $650 /mt or $570 /nt to $590 /nt) FOB mill. Import wire rod offering prices are still on the rise, with mesh offers going up another $0.75 cwt. ($16.50 /mt or $15 /nt) in the past week. Mesh-quality import rod offers now range from $26.50 cwt. to $27.50 cwt. ($584 /mt to $606 /mt or $530 /nt to $550 /nt) FOB, loaded truck, in US Gulf Ports, while drawing quality rod still ranges from $28.50 cwt. to $29.50 cwt. ($628 /mt to $650 /mt or $570 /nt to $590 /nt) FOB, loaded truck, in US Gulf ports. The presence of Turkish imports has significantly diminished from the market, with asking prices now out-of-sight. Most Turkish mills now concentrate either on their local market where the prices are higher, or on converting their wire rod production to rebars or billets. Both raw materials and wire rod prices are moving up in China, which should soon lead to higher asking prices for the US. At this time, there is no news from China regarding the VAT tax rebate. Mills now insist that their traders share the VAT tax rebate reduction cost. The rebate can potentially be reduced from 8 percent to zero. License data from the US import administration shows that in February 2007, the following countries exported the most wire rod tonnage to the US: Canada, at 29,093 mt; Trinidad and Tobago, at 17,537 mt; China, at 16,879 mt; Brazil, at 11,493 mt; and Argentina, at 6,205 mt. Total wire rod imports to the US during February were 92,610 mt, significantly lower than the 186,127 mt imported in January. In January 2007, China alone exported 114,929 mt to the US. Chinese entries will be on the low side in the next couple of months, because of the light booking in the fourth quarter. However, they should start picking up again in June and July.