After weakening slightly earlier this month, US wire rod prices are poised to fall further as Chinese offers are now within striking range of the US market.
Since last week, competitive Chinese offers to the US of mesh-quality, boron-added wire rod have dropped below those of their Turkish counterparts, with most offers now ranging from approximately $25.00 cwt. to $26.00 cwt. ($551/mt to $573/mt or $500/nt to $520/nt) duty-paid, FOB loaded truck in US Gulf ports. Traders say that not all mills are at this low of a level and that there are no bookings of Chinese rod taking place yet; however, they expect to start booking some Chinese orders imminently.
Undoubtedly, the downward pressure from the increasingly competitive Chinese offers will affect the Turkish rod offers for the US as well. Current Turkish mesh quality rod offers for the US still range 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, and Turkish mills have been struggling to keep their offers firm in recent weeks despite the weak demand. However, though they will likely be forced to lower their offers within the next couple weeks in order to compete with China in the global marketplace, and in the US in particular.
At the international long products-focused SteelOrbis Fall Conference and IREPAS meeting which wrapped up in Dubai, UAE this Tuesday, the general sentiment is that while conditions are currently soft, we will see a better 2010. However, it is also observed that the view from the traders' corner is not as bright as that of the producers, with some attendees not expecting to see a meaningful recovery until late 2010. Still, with mills worldwide continuing to be disciplined with their production and the economies of the world beginning to recover, most still believe that the worst is behind us.
On the domestic end, most low carbon offers remain at a range of approximately $28.50 cwt. to $29.50 cwt. ($628/mt to $650/mt or $570/nt to $590/nt) ex-mill. With both scrap prices and import offers trending down, the price trend for domestic wire rod is down as well.
Still, most US rod buyers won't switch back to booking import overnight, especially with the limitations and complications that sometimes arise when buying Chinese rod. Size ranges, tensile strength options and coil quality can be limited when booking from Chinese mills, and many buyers are too wary or have had problems with Chinese shipments in the past and would rather stick with the trusted quality and smaller shipments they are able to get from domestic mills. On the other hand, other customers find Chinese rod quality acceptable for their applications and domestic mills are motivated to prevent the price gap between domestic and import prices become too large, lest they start losing some of their hard-earned market share.