US wire rod market looking slightly up again as mills, traders raise prices

Judging from the overall mood at last week's American Wire Producers Association (AWPA) conference held in Washington DC, US wire rod buyers are generally optimistic about the first quarter of next year, despite the current weak business for mesh-grade applications.

Attendees told SteelOrbis that while low carbon rod demand remains poor, higher carbon materials are seeing slightly stronger consumption from the automotive sector and even the mesh guys are anticipating better times by early next year. Also helping lift the spirits in the US wire rod industry are the October price hikes made by several US rod producers within the last week.

Several rod manufacturers, including Gerdau Ameristeel and ArcelorMittal USA announced last week that they would raise prices for wire rod by $25/nt as of October 1. Although domestic spot prices for low carbon rod have yet to rise in response to the announced hikes, the domestic pricing trend has shifted from neutral to slightly up since last week as at least part of the announced increases are expected to go through.

Overall demand for low carbon wire rod remains soft due to the sagging construction markets, but with US wire rod production capacities having been trimmed significantly after the recent closure of two major plants and with the import pipeline all but dried up, supplies are tight. With no major changes expected on the supply side this year and the demand conditions, while low, expected to start slowly improving along with the economy over the next several months, producers may be able to gather some pricing momentum again.

For now, most US domestic low carbon rod offers continue to range from approximately $28.00 cwt. to $29.00 cwt. ($617/mt to $639/mt or $560/nt to $580/nt) ex-mill. However, since last week, buyers observe that the few offers that were below this range have since disappeared. Furthermore, with ArcelorMittal shifting much of its North American wire rod production to Canada following the closure of its Georgetown, South Carolina mill, depending on the buyer's location in the US, the delivered price can be as high as $31.00 cwt. ($683/mt or $620/nt).

On the import side, the price trend for wire rod has shifted to slightly up as well. Turkish mills' prices have not changed since last week, but traders have inched up their offers, hoping to make at least a small profit on the back of the domestic price hikes. Also, some think that the Chinese market has bottomed, and that if US prices start to rise again, Chinese and Turkish mills will raise their export prices in turn.

For now Chinese rod offers for the US still aren't competitive unless someone is looking to buy a large tonnage order of only one or two specific sizes. The Turkish market remains quiet as the Ramadan holiday is still being observed, though as mentioned, traders have already raised their prices for Turkish rod.

Mesh quality rod offers of Turkish origin now range from approximately $27.00 cwt. to $28.00 cwt. ($595/mt to $617/mt or $540/nt to $560/nt) duty-paid, FOB loaded truck in US Gulf ports, up $1.00 cwt. ($22/mt or $20/nt) since last week. While this range is still slightly under the US domestic range, there are still few, if any, import bookings taking place. With the added risk and longer lead times that come with buying imports, most rod consumers that are looking to buy want to purchase in the low $27's cwt., and traders are not able to sell at this price and make a profit. Furthermore, with the long-term market trend still uncertain, buyers still generally prefer to purchase domestic material, which they can order in smaller quantities even if it comes at a slightly higher price.