Domestic wire rod prices in the US market have fallen by another notch in the last week, with most offers now at about $1.00 cwt. ($22 /mt or $20 /nt) less than last week's pricing levels.
Most low-carbon domestic wire rod offers currently range from about $32.00 cwt. to $33.00 cwt. ($705 /mt to $728 /mt or $640 /nt to $660 /nt) FOB mill. Shredded scrap prices have rebounded by over $100/long ton this month, and wire rod mills have cut production significantly; however, the weak demand is still creating a downward pricing pressure on the market.
Buyers say that large buyers might be able to get rod at slightly below $32.00 cwt.; however, there are no large orders being placed. Business is not expected to improve through the end of the year, and therefore, even with raw material cost increases, there is still a chance that prices could come down further this month.
The mills are hopeful, however, that their order books may start to fill up again early next year, especially if the scrap price increases continue. Buyers want to be sure that the prices have bottomed out. Rising scrap prices may reinforce the sentiment that wire rod prices are close to the bottom. But with no current improvement in demand in sight, the pricing trend for import wire rod remains slightly down for the time being.
As far as the producers are concerned, the mills are in "hunker down" mode, with many operating at very reduced levels or shut down entirely through at least the end of the year.
For mesh-quality rod imports, Turkish offers are still the most competitive source offering, and most new offers continue to range from about $26.75 cwt. to $27.75 cwt. ($590 /mt to $612 /mt or $535 /nt to $555 /nt) duty-paid, FOB mill, in US Gulf ports. However, traders report that there is a lot of distressed cargo at the ports that is offered at less than the above range. Not all of this cargo necessarily has any major quality problems; however, in this weak market, if there is any minor problem with the steel when it arrives, it is common for customers to complain about it.
One positive for the US rod market is that import arrivals are down considerably this year. Final Census Data from the US Department of Commerce show that the total annual quantity of wire rod imports through the end of September was 795,583 mt, compared to 1,171,788 mt for the same period of 2007. The top import wire rod sources in 2008 through September were: Canada, at 314,391 mt; Germany, at 96,223 mt; Brazil, at 93,272 mt; Turkey, at 78,965 mt; and China, at 789,611 mt. Chinese tonnage is especially down this year compared to last; in the first 9 months of 2008, China was the US' largest import rod source, with 521,531 mt.
