Chinese wire rod offers for the US have come down a notch since last week, as both Chinese and US wire rod demand has softened.
Traders have lowered their offers for boron-added rods from China by $1.50 cwt. ($33 /mt or $30 /nt) to a range of $55.00 cwt. to $56.00 cwt. ($1,213 /mt to $1,235 /mt or $1,100 /nt to $1,120 /nt) FOB loaded truck, in US Gulf ports. Chinese mills are now quoting lower prices for traders due to soft domestic demand, and the traders were having difficulty booking orders from US customers at their previous price range. The pricing trend for Chinese wire rod is still slightly down due to the slow booking activity in both China and the US.
China is still the only source offering wire rod competitively to the US, although offering prices from Turkey and Eastern Europe are trending down. There are also offers appearing from more non-traditional sources that currently have slow home markets, including South Korea, Malaysia, and Indonesia. These offers are still not feasible compared to the US domestic price, but just the appearance of these offers on the market is a big change, since it indicates that they are looking for business. There is a good chance that we may see these offers start to trend down until they reach the domestic price level.
On the domestic side of the market, prices have officially held up since the last $60 /nt ($66 /mt or $3.00 cwt.) August price increase; however, there is a great pressure on prices to drop down because the import prices are declining and sales are so slow. In addition, scrap prices are trending downward, so the mills will no longer be able to use the raw material price to justify raising prices. If the scrap price decrease is significant and import prices continue to come down, mills might not even be able to keep their prices stable for much longer. For these reasons, the domestic pricing trend for wire rod has shifted to slightly down.
The price range for domestic wire rod remains at $56.00 cwt. to $57.00 cwt. ($1,235 /mt to $1,257 /mt or $1,120 /nt to $1,140 /nt) FOB mill, with an extra of $20 /nt ($22 /mt or $1.00 cwt.) for 5.5 mm (7/32-inch) rods. High carbon rods range from $58.50 cwt. to $59.50 cwt. ($1,290 /mt to $1,312 /mt or $1,170 /nt to $1,190 /nt) FOB mill. However, it is not unforeseeable that mills might start to make some special deals for large customers in the coming weeks, and forego the extra for 5.5 mm (7/32"). No significant price decreases are expected, though, due to the market's continued supply problems.
Data from the US Import Administration show that wire rod imports remain at relatively low levels. License Data for July show 75,546 mt of total wire rod imports, compared to 138,325 mt in July 2007 and compared to 104,962 mt in June 2008. The top import wire rod sources in July 2008 based on current license data were: Canada, at 26,958 mt; China, at 14,912 mt; Brazil, at 10,806 mt; Japan, at 9,764 mt; and Malaysia, at 6,537 mt.