US wire rod market – Imports register a small decrease

Following the downward pricing trend for import wire rod, import prices for mesh grade and industrial quality (drawing) rods have decreased by approximately $5 /nt ($5.50 /mt or $0.25 cwt.) since last week. Mesh grade import offers in the market now range from $23.75 cwt. to $24.75 cwt. ($524 /mt to $546 /mt or $475 /nt to $495 /nt) FOB, loaded-truck, in US Gulf. Drawing quality import offers range from $25.50 cwt. to $26.50 cwt. ($562 /mt to $584 /mt or $510 /nt to $530 /nt) FOB, loaded-truck, in US Gulf. Other than the price decrease, not much has changed in the import wire rod market since last week. Sales in the US are still very weak, as most wire drawers already have high inventories. The pricing trend is still slightly down. While wire rod import prices from most countries have slipped, South American import prices are still relatively stable for the time being. However, their order backlogs are getting shorter which could indicate that the very strong rod cycle might come to an end. Final census data from the US Import Administration shows that in the first six months of 2006, the countries which exported the most wire rod tonnage to the US were: China, at 486,278 mt; Canada, at 159,180 mt; Turkey, at 149,860 mt; Brazil, at 71,429 mt; and Trinidad and Tobago, at 69,319 mt. Turkey import rank was reduced this year; it was once number one in 2004 and number two in 2005. Now, struggling to meet stiff price competition for wire rods from China, Turkish mills would rather export rebars to the US, which they will get higher returns for. The domestic market is still steady, and the pricing trend remains neutral. As we mentioned in our last report, domestic mills are willing to negotiate prices, which is an early indication that the market may weaken in the coming weeks. For now, domestic offers still range from $27.00 cwt. to $28.00 cwt. ($595 /mt to $617 /mt or $540 /nt to $560 /nt) FOB mill for low carbon, and from $30.00 cwt. to $32.00 cwt. ($661 /mt to $705 /mt or $600 /nt to $640 /nt) FOB mill for high carbon. In other news on the supply end, the Sicartsa strike in Lazaro Cardenas, Mexico has ended, which should further loosen up the tight wire rod market in Mexico and soften the US market further.