US wire rod market – Chinese imports start to slip

Import offering prices for mesh grade wire rod to the US have decreased by $0.25 cwt. ($5.50 /mt or $5 /nt) since last week, as the Chinese wire rod market has started to soften. Import offers for mesh quality wire rod now range on average from $23.25 cwt. to $24.25 cwt. ($512 /mt to $535 /mt or $465 /nt to $485 /nt) FOB, loaded-truck, in US Gulf ports. Import drawing quality rod prices still range from $25.00 cwt. to $26.00 cwt. ($551 /mt to $573 /mt or $500 /nt to $520 /nt) FOB, loaded-truck, in US Gulf ports. The Chinese home market for wire rod is now in a period of decline, though it is not happening at a very fast pace. Exporting wire rod mills in China have started to listen to lower price ideas from the US market, but they are not desperate enough to agree to a significant price decrease just yet. However, the Chinese construction sector consumes most of the steel produced in China, and during the winter months, construction in China slows down. Lower seasonal demand, along with increased billet availability, which will likely occur as a result of the increased export tax on billets, will make Chinese wire rod mills more interested in US business and more willing to cave into the pressure from US customers to lower prices. As China is still the US' main source for import wire rod (though new sales are very slow right now), the import pricing trend is still slightly down. Preliminary license data from the US Import Steel Monitor shows that during the month of October, China exported 153,378 mt of wire rod to the US, followed by Canada, at 19,972 mt; Turkey, at 16,003 mt; South Africa, at 8,324 mt; and Egypt, at 8,045 mt. Domestic prices have not changed since last week. Although the overall pricing trend is still moving downward, mills have started significantly cutting production to avoid a free fall in pricing. There are still better deals for large tonnage buyers, but for the most part, mills are no longer engaging in the negotiations that will deteriorate the pricing significantly from today's pricing. Most domestic low carbon wire rod offers still range from $25.50 cwt. to $26.50 cwt. ($562 /mt to $584 /mt or $510 /nt to $530 /nt) ex-mill. High carbon prices still range from $28.50 cwt. to $30.50 cwt. ($628 /mt to $672 /mt or $570 /nt to $610 /nt). The domestic pricing trend is now only slightly down.