After dropping their prices by roughly $70 /nt ($77 /mt or $3.50 cwt.) earlier in the month, US wire rod mills are trying to hold prices steady while facing mounting pressure from the weakening import prices.
Most low carbon rod offers from domestic mills continue to range from $51.50 cwt. to $52.50 cwt. ($1,135 /mt to $1,157 /mt or $1,030 /nt to $1,050 /nt) ex-mill. However, they are not booking many offers because of the slow demand and cheaper import alternatives. The pricing trend for domestic rod remains down for these reasons as well as the down-trending scrap prices.
Meanwhile, traders have lowered their import rod numbers by about another $1.00 cwt. ($22 /mt or $20 /nt) in the last week in reaction to the softening prices from import mills in China and Turkey as well as the lack of demand in the US.
Offers for import mesh in the US now range from approximately $41.25 cwt. to $42.25 cwt. ($909 /mt to $931 /mt or $825 /nt to $845 /mt) duty-paid, FOB loaded truck, in US Gulf ports. The pricing trend for these imports is still down, as offers from China and Turkey continue to weaken.
Turkey has been the most competitive import source in recent weeks, but traders say that Chinese mills have now lowered their prices to compete with the Turkish offers. Mills in both China and Turkey are very willing to negotiate pricing in order to get any orders.
So when will this thing bottom out? There is not a good chance of a recovery before the end of the year, unfortunately. Demand from the wire business is, as one rod seller put it, "awful," and there won't be any improvements in rod consumption until wire drawers have to replenish inventories.
In addition to the already weak demand, the recent economic upheavals have steel buyers in a very unsure state; no one wants to commit to buying much tonnage during this time of uncertainty. Buyers will continue to purchase only what they need, as the expectation in the market is that prices will continue to go down in the short term, along with the faltering economy.
However there is reason to believe that the current downtrend will not extend past the end of the year, as the beginning of 2009 will bring a new administration and, steel sellers hope, renewed optimism in the economy, which will positively impact steel consumption.