Domestic wire rod mills have started to encounter resistance to recent price increases, as current spot prices settle just beneath last week's level.
Last week, wire rod prices in the US market had stalled, but the expectation of higher scrap prices in February offered some semblance of optimism for March shipment prices. Since then, however, scrap speculation has shifted, with many expecting a sideways price trend to be announced in the next couple weeks. Without the guarantee of higher raw material costs next month, domestic wire rod mills have backed off on pushing through the full $3.75 cwt. ($83/mt or $75/nt) increase for February shipments announced two weeks ago. As a result, spot prices have dipped slightly into the range of $37.00-$38.00 cwt. ($816-$838/mt or $740-$760/nt) ex-Midwest mill, a decrease of $0.50 cwt. ($11/mt or $10/nt) since last week.
Purchasing activity has been steady so far this year, but in the last week, US wire rod buyers have altered their strategy slightly by only placing minimum orders until February scrap prices are announced, believing that there is now a strong chance that March shipment prices will be a bit lower. Because demand is still decent, any downtrend in both scrap and wire rod pricing will not likely be substantial-if anything, it will represent a slight market correction, lasting only until the spring construction season (which is expected to be better than 2010) gets underway.
As for imports, Turkish mills mirrored US mills in that wire rod prices have "hit the ceiling," and the market is starting to react. SteelOrbis has learned that import wire rod prices are a bit lower than last week, by $0.50 cwt. Offers are now in the range of $35.50-$36.50 cwt. ($783-$805/mt or $710-$730/nt) duty paid FOB loaded truck in US Gulf ports, but customers with large orders can likely get deals below. Again, the dip in pricing is not exactly a price decrease, but rather a readjustment in the market reflecting a slight downtrend. Nevertheless, there are not many US customers interested in import offers at this time.
