With Mittal and Keystone both announcing $50 /nt ($55 /mt or $2.50 cwt.) price increases in the past week, US domestic low carbon wire rod prices are poised to rise to a level of $35.00 cwt. to $37.00 cwt. ($772 /mt to $816 /mt or $700 /nt to $740 /nt) FOB mill.
There have been no major orders placed at these higher prices just yet, and it remains to be seen whether the full increase will go through. For now, low carbon rods continue to range from $32.50 cwt. to $33.50 cwt. ($717 /mt to $739 /mt or $650 /nt to $670 /nt) FOB mill, while most high carbon offers range from $35.00 cwt. to $37.00 cwt. ($772 /mt to $816 /mt or $700 /nt to $740 /nt) FOB mill.
It is likely that the increase will be accepted as mills need to recover their scrap costs, and there are no cheap import alternatives for customers to buy instead. For this reason, the domestic pricing trend remains strongly up.
However, the upward pricing trend is strictly cost-driven, rather than demand-driven. Apparent domestic wire rod consumption in 2007 through November, calculated from domestic shipments, imports, and exports, was 3,167,894 nt, which on an annualized basis, is 3,455,884 nt (3,135,143 mt), significantly less than the apparent wire consumption in 2006, 4,793,766 nt (4,348,857 mt). It appears that the US market lost at least 1 million metric tons of consumption in 2007, most of which came out of imports, as domestic production did not decrease significantly.
On the import side, not very many traders have anything to sell. Market prices for imports have moved up by approximately $1.00 cwt. ($22 /mt or $20 /nt) in the past week, though new offers from Turkey and Germany are significantly higher than the few offers that traders are offering, and significantly higher than domestic prices also.
Import offers for mesh quality wire rod now range from $35.50 cwt. to $36.50 cwt. ($783 /mt to $805 /mt or $710 /nt to $730 /nt) FOB, loaded truck, in US Gulf ports, while drawing quality offers range from $37.25 cwt. to $38.25 cwt. ($822 /mt to $843 /mt or $745 /nt to $765 /nt) FOB, loaded truck, in US Gulf ports. New mesh quality offers from foreign mills currently range from $38.00 cwt. to $39.00 cwt. ($838 /mt to $860 /mt or $760 nt to $780 /nt) though no deals have been made at these prices. The pricing trend for import rod remains strongly up.
The latest census data from the US Import Monitor continue to show a decrease in wire rod import arrivals to the US in 2007 as compared to 2006, with a significant decrease in wire rod imports from China and Turkey in particular. Year-to-date (YTD) through November 2007, wire rod imports totaled 1,306,002 mt, compared to 2,579,117 mt imported during the same period of the previous year. Top wire rod import sources in 2007 through November were China, with 530,458 mt (compared to 1,145,449 mt the previous year); Canada, with 316,319 mt; Brazil, with 126,918 mt; Japan, with 102,320 mt; and Trinidad & Tobago, with 80,671 mt. Turkey, which was the third-largest import rod source during the same period of 2006 with 227,631 mt, exported only 12,597 mt to the US in 2007.