After a quiet holiday week, the US wire rod market remains in a depressed state, with very little commercial activity taking place.
As one trader told SteelOrbis this week, "There is not much going on on any front. Producers are pinning their hopes on some kind of turnaround in January, but demand is still very weak, and there is still a lot of wire rod on the ground."
While wire rod inventories are at relatively low levels compared to previous market downturns, they are high in terms of how long it will take to liquidate them given the extremely weak demand.
On the bright side, neither domestic nor import rod prices for the US have moved substantially in the last week, though both ends of the market remain somewhat negotiable.
Domestic low carbon rod offers continue to range from approximately $32.00 cwt. to $33.00 cwt. ($705 /mt to $728 /mt or $640 /nt to $660 /nt) FOB mill. However, mills are still willing to negotiate a slightly lower price for large orders. The extras for high carbon rods have become negotiable as well and the spread between the low and high carbon price has narrowed. Most domestic high carbon offers are currently between $0.75 cwt. to $1.25 cwt. ($17 /mt to $28 /mt or $15 /nt to $25 /nt) higher than low carbon offers.
The pricing trend for domestic rod is still neutral. A big turnaround seems unlikely to happen in the near future, but generally, most market players are optimistic that there will be at least some rebound in the first quarter.
On the import side, very few transactions have taken place during the slow holiday week, and with the New Year's holiday, this week will probably be a slow one as well. Some traders are fishing around for offers to present to the foreign mills, who are still largely willing to negotiate a lower price depending on the size of the order, but there are not many customers that want to place an order right now.
Most import mesh quality offers continue to range from $26.75 cwt. to $27.75 cwt. ($590 /mt to $612 /mt or $535 /nt to $555 /nt) duty-paid, FOB loaded truck in US Gulf ports, with Turkey leading the way with the cheapest offers. The pricing trend for import rod offers for the US is also neutral, with no major changes expected to take place until well into the first month of the New Year at the soonest.
Preliminary Census Data from the US Import Administration show that wire rod imports to the US were down slightly in November from the previous month, though up year-on-year. Import wire rod tons to the US totaled 93,620 mt in November 2008, compared to 106,175 mt in October, and 64,423 mt in November 2007. The US' largest source of import rods in November was Turkey, with 20,377 mt; followed by Canada, at 20,035 mt; Japan, 12,285 mt; Brazil, 9,783 mt; and Russia, 9,760 mt. Both Turkish and Russian wire rod imports registered significant increases compared to the month before, with both countries accounting for 0 mt in October. However, wire rod imports from China were down tremendously in November, at 7,534 mt, compared to 53,299 mt in October.