US wire rod market remains tight despite lackluster demand

The price trend for US wire rod continues to point in an upward direction, as supplies are shrinking and mill lead times are getting pushed out.

Most low carbon wire rod offers from US mills haven't moved from the $25.50 cwt. to $26.50 cwt. ($562 /mt to $584 /mt or $510 /nt to $530 /nt) ex-mill level seen last week; however, with the probable closure of ArcelorMittal Georgetown, other mills are picking up the slack and booking more orders. Actual wire rod demand has not improved much in recent weeks but, it is still, as one customer put it, “slowly getting better.”

Furthermore, the expected modest increase in US scrap prices in July should also give the longs market, including wire rod, a small boost, or at least help it to cement the current price level as the bottom.

Regarding ArcelorMittal Georgetown, while the company has urged the plant's United Steelworkers union branch to accept certain concessions so that the mill can stay open, the union has rejected such concessions so far. As for now, Georgetown is set to close indefinitely on July 12 if there is not an agreement reached between the union and management before this date. At the very least, the mill will close on a temporary basis due to market conditions. This mill represents about 750,000 tons of the US' annual wire rod production.

On the import side, Turkey remains virtually the only source offering low carbon wire rod to the US, and their offers are still uncompetitive. Most offers continue to range from about $24.00 cwt. to $25.00 cwt. ($529 /mt to $551 /mt or $480 /nt to $500 /nt) duty-paid, FOB loaded truck in US Gulf ports, but mills still aren't getting any US bookings at this price level. Nevertheless, scrap prices in Turkey have increased again, as have local Turkish wire rod prices, so their export wire rod offers may soon follow suit. The scrap improvement since last week has counteracted the downward pressure in the market last week, and the price trend for Turkish rod imports is now neutral to slightly up.

Preliminary Census Data show that US wire rod imports totaled 25,230 mt in May, with the most imports coming Canada (12,565 mt), Japan (12,565 mt), Brazil (8,575 mt), Korea (1,282) mt and Mexico (336 mt). These sources represent little low carbon tonnage with the big low carbon suppliers, Turkey and China, remain absent from the list.