US wire rod market – Import market awaits Chinese VAT decision

Though it is still too early to register the extent of the price increase for domestic wire rods, it is clear that import wire rod prices have been increasing steadily since last week. Import wire rod offers have risen by approximately $0.50 cwt. ($11 /mt or $10 /nt) since last week, now ranging from $24.25 cwt. and $25.25 cwt. ($535 /mt to $557 /mt or $485 /nt to $505 /nt) for mesh grade, FOB, loaded-truck, in US Gulf ports, and from $25.75 cwt. to $27.25 cwt. ($568 /mt to $601 /mt or $515 /nt to $545 /nt) for drawing quality, FOB, loaded-truck, in US Gulf ports. The import pricing trend is still strongly up because wire rod consumption is still steady and supplies are still rather limited, partly because of the Sicartsa rod mill strike in Mexico. Also, the announcement of the Chinese government's cutback of the value-added tax refund is expected to occur later this week, which should push Chinese prices up another $20 /nt ($22 /mt or $1.00 cwt.) to $30 /nt ($33 /mt or $1.50 cwt.), possibly effective July 1. Domestic wire rods are still at the same pricing range we announced last week, and the extent of the June and July price increase will be determined within the next several weeks. The domestic pricing trend is strongly up, so it is possible that the majority of buyers will accept a price hike as large as Mittal's $50 /nt ($55 /mt or $2.50 cwt.) increase. For now, domestic offers still range from $26.00 cwt. to $27.00 cwt. ($573 /mt to $595 /mt or $520 /nt to $540 /nt) for low carbon FOB mill, and from $28.50 cwt. to $30.50 cwt. ($628 /mt to $672 /mt or $570 /nt to $610 /nt) for high carbon FOB mill.