Spot prices in the US wire rod market have dropped in the last week as rod producers follow Nucor's longs price decrease of $70 /nt ($77 /mt or $3.50 cwt.).
Most mills have not officially announced a price decrease, but buyers say that the major US rod mills like ArcelorMittal and Gerdau Ameristeel are now quoting customers numbers that are $3.50 cwt. lower than the previous price level, effective for October/November shipments.
Most domestic rod offers for the fourth quarter now range from $51.50 cwt. to $52.50 cwt. ($1,135 /mt to $1,157 /mt or $1,030 /nt to $1,050 /nt) ex-mill.
Even with this price drop, the pricing trend for domestic wire rod is still down due to the plummeting import prices. There are still problems on the domestic production side, which now include the loss of at least several days of production at Gerdau Ameristeel Beaumont due to damages caused by Hurricane Ike; however, as long as import offers keep falling, domestic mills will have a hard time preventing their prices from doing the same.
Import wire rod spot offers in the US have also taken a dive in the last week, with most traders' offers for Turkish and Chinese mesh grade rod now ranging from $42.25 cwt. to $43.25 cwt. ($931 /mt to $954 /mt or $845 /nt to $865 /nt) duty-paid, FOB loaded truck in US Gulf ports. This represents a $2.00 cwt. ($44 /mt or $40 /nt) decrease on average since last week.
Traders say that Turkish mills are still the most competitive source offering right now, and that Chinese mills, while still seeking orders, are not as desperate. As we reported last week, some of the Turkish offers are gaining some traction, though not in a major way. In general, the market is still very quiet, with very little buying taking place on the domestic or import side.
The pricing trend for import rods is also still pointing down, with foreign mills' prices to traders getting lower almost every day. With prices continually falling and some material that was purchased at a higher price just now arriving to US shores, claims are popping up left and right. As is often seen in a down market, buyers are in many cases looking for any reason they can not to accept the material they ordered, or trying to cancel or renegotiate orders. Unfortunately for traders, the burden of dealing with the claims falls largely on them.
Preliminary Census Data from the Steel Import Monitoring and Analysis System (SIMA) show that in August, wire rod imports totaled 67,050 mt, including the largest amount of Chinese tonnage seen in recent months. The US' largest import wire rod source in August was Canada, at 26,742, followed by China, at 23,878 mt, the highest monthly amount of rod imports from China since September 2007, when they totaled 26,662 mt. After China, the next largest import rod sources in August were Japan, at 7,553 mt; Germany, at 4,439 mt; and Brazil, at 2,619 mt.