As predicted last week, wire rod prices have stabilized along with other long products in the wake of a surprising sideways move with scrap.
Not only did scrap pricing not increase as expected by many in the industry, there is now a strong possibility that it will go down by about $20-$30/lt ($0.90 cwt. to $1.30 cwt. or $18/nt to $27/nt) in May. Wire rod purchases for the sole purpose of beating further price increases has halted, and mills are now relying on actual end-use demand to drive their sales. Although spring is in full swing, the construction market is going through growth spurts-demand is up one week and down the next, despite a recent announcement by the US Census Bureau that residential construction is looking up. The agricultural sector is still strong, and the automotive industry is making great strides; General Motors recently announced its plans to repay all of the loaned bailout funds back to the US government by June-five years ahead of schedule.
For now, domestic wire rod mills are using up previously purchased, higher-cost scrap, resulting in no change in wire rod prices this week. Offers are still in the range of $32.00 cwt. to $33.00 cwt. ($705/mt to $728/mt or $640/nt to $660/nt) ex-Midwest mill, but it is likely that deals can be made in light of the potential downward trend ahead.
Import wire rod pricing has also leveled out, with Turkish prices still in the prohibitively high range of $33.00 cwt. to $34.00 cwt. ($728/mt to $750/mt or $660/nt to $680/nt) duty paid, FOB loaded truck in US Gulf ports. Chinese wire rod offers are also the same as last week, in the approximate levels of $32.00 cwt. to $33.00 cwt. ($705/mt to $728/mt or $640/nt to $660/nt) duty paid, FOB loaded truck in US Gulf ports, but there seems to be an indication that there might be a slight price correction within the next week. Even so, customers are passing over import offers in general because of long lead times and uncertainty of where the market will be in a few months.