US wire rod market - Increased domestic supply may cause softening

Driven by the strong construction market, business for wire mesh, chain link fence, and nails remains very strong. US demand for wire rod is strong, due to the increased business for these construction-related applications. With scrap prices still on the rise in Turkey and China, and with the current absence of European offers, Turkish and Chinese mills are in a position to ask for higher prices from their US customers. Prices will probably rise slightly in the coming weeks, but as of now, import prices remain at the same level they were at last week. Import offers are still ranging from $20.50 cwt. to $21.50 cwt. ($410 /nt to $430 /nt or $452 /mt to $474 /mt) for mesh quality. Drawing quality grades range from $22.50 cwt. to $23.50 cwt. ($450 /nt to $470 /nt or $496 /mt to $518 /mt) FOB US Gulf Ports. The domestic pricing trend, on the other hand, is now slightly down. Although demand for wire rod is strong, the US has seen record amounts of wire rod imports this month, which are counteracting the otherwise strong business conditions. Various production problems at rod mills like Rocky Mountain Steel, Keystone, and Gerdau Ameristeel's New Jersey facility had been keeping domestic prices higher due to the decreased output, but now these mills are starting to resolve their problems and are gearing up for increased production. Therefore, within the coming weeks we may see some market softening as a result of increased imports and increased domestic production. Rising import prices, however, will hopefully keep US prices from falling too far, since there will be less of a price gap between domestic and import offers. Domestic low carbon grades still range from $26.50 cwt. to $27.50 cwt. ($584 /mt to $606 /mt or $530 /nt to $550 /nt) FOB mill. Depending on location and quality, some low carbon rod is selling for up to $28.50 cwt. (628 /mt or $570 /nt). High carbon grades range from $29.00 cwt. to $31.00 cwt. ($639 /mt to $683 /mt or $580 /nt to $620 /nt). Tire cord grades are excluded due to limited domestic supply.