After holding on to prices since late March, domestic wire rod mills finally caved to the pressure of lower raw material costs by lowering transaction pricing by $1.00 cwt.
In the last two weeks, spot offers were heard of at about $0.50 cwt. ($11/mt or $10/nt) less than the $32.00 cwt. to $33.00 cwt. ($705/mt to $728/mt or $640/nt to $660/nt) months-long price range, indicating the likelihood that most offers would drop in the near future. Domestic wire rod mills waited to make a move until after the official announcements regarding other long product prices were released, and in response to an across the board $1.00 cwt. ($22/mt or $20/nt) decrease (rebar, merchant bar, wide flange beams), mills dropped wire rod by the same amount. Current offers for wire rod in the US are now in the range of $30.50 cwt. to $31.50 cwt. ($672/mt to $694/mt or $610/nt to $630/nt) ex-mill, reflecting both the recent $1.00 cwt. decrease along with the $0.50 cwt. dip in spot prices over the last two weeks. However, prices are still negotiable. Customers with large orders have been able to make substantial deals, for up to $1.00 cwt. to $1.50 cwt. ($22/mt to $33/mt or $20/nt to $30/nt) less than the new asking price.
The flexibility in wire rod prices can be partially attributed to lower demand from the automotive sector. After peaking for the year in April, automotive sales have started to slowly slide downward. Since early fall of last year, right before the Cash for Clunkers program lifted auto sales back into the black, the automotive sector has been very influential in keeping the wire rod market afloat. Other sectors such as agricultural equipment are still doing relatively well, but if automotive doesn't pick back up, domestic mills will have a hard time holding onto their already slipping wire rod prices.
On the import side, Turkish scrap prices increased again for the second week in a row, by about $10/mt, yet Turkish wire rod mills are reluctant to raise import prices considering the recent drop in US prices. Current prices have not changed from last week, and wire rod from Turkey is still offered in the range of $28.50 cwt. to $29.50 cwt. ($628/mt to $650/mt or $570/nt to $590/nt) duty paid, FOB loaded truck in US Gulf ports. While the import trend is holding steady, Turkish mills might be pressured to adjust their import prices, despite rising scrap overseas, if they want to compete with the downtrending US market.
