US wire rod market expecting slight boost from scrap

The price trend in the US domestic wire rod market has shifted to slightly up as rising scrap prices are spurring expectations that mills will announce at least a small price hike within the next couple weeks.

Currently, prices remain somewhat negotiable for larger buyers, but the lower-priced offers that had been floating around in previous weeks are drying up and the expectation is that producers will soon announce a price increase for January based on the anticipated December scrap price up-tick. Although the increase in net wire rod prices may not reflect the full increase in raw materials costs, mills will probably be able to push through at least $20/nt to $30/nt of the estimated $50/nt shredded scrap price up-tick.

For now, most domestic low carbon offers continue to range from approximately $27.50 cwt. to $28.50 cwt. ($606/mt to $628/mt or $550/nt to $570/nt) ex-mill though some offers as high as $29.50 cwt. have been heard on the West Coast.

Meanwhile, import offers increased since last week, with both Chinese and Turkish offers rising by approximately $0.50 cwt. ($11/mt or $10/nt) since last week, with most import offers of mesh-quality rod for the US now ranging from $26.00 cwt. to $27.00 cwt. ($573/mt to $595/mt or $520/nt to $540/nt) duty-paid, FOB loaded truck in US Gulf ports.

Both Chinese and Turkish mills have raised their export prices due to rising demand in China and rising raw material costs in Turkey; nevertheless, traders say there remains no interest from US buyers.

Import licensing data collected through December 1, 2009 show that after spiking to an annual high of 109,320 mt in October due largely to a brief appearance by Turkey, US wire rod imports dropped back down to 62,703 mt in November in the absence of Turkey. November import licenses for wire rod mostly came from: Canada (27,827 mt); Brazil (10,707 mt); and Mexico (6,819 mt) and were about 35 percent lower than the November 2008 total.