Published prices for many long products decreased by varying amounts this week, leaving many to wonder whether domestic mills will follow suit with wire rod.
Monday announcements from Nucor mills revealed a range of price decreases for different products. Rebar decreased by a slight $5/nt ($0.25 cwt. or $5.50/mt), wide flange beams by a more significant $25/nt ($1.25 cwt. or $28/mt) and merchant bars and structurals by a hefty $45/nt ($2.25 cwt. or $50/mt). Dropping import offers were attributed to some of the pricing drops, but for others, such as beams, Nucor-Yamato explicitly stated in the announcement that it was a "response to a domestic competitor's rebates".
For the past month, import offers for wire rod from Turkey have steadily declined, but US wire rod mills did not feel much pressure to adjust their prices because they had the advantage of supplying manageable order sizes for customers; with many wire drawers still keeping their inventories low, the prospect of placing large orders overseas was not as attractive. However, more domestic mills are producing at full capacity due to many idled facilities. But some of those idled plants may come back online before the end of the year (such as the rumored reopening of ArcelorMittal's Georgetown mill). Eventually, more domestic wire rod supply in the market will likely force mills to finally lower prices. For now, offers for low carbon rods 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 remains to be seen how long they can hold on to these prices before succumbing to pressure.
Import pressure might soon have an effect on US mills, especially if import prices for wire rod continue to drop. Turkish offers came down by another $0.50 cwt. ($11/mt or $10/nt) in the last week, bringing prices into 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. Turkish mills continue to suffer from poor business, especially considering that Europe, one of their traditional export markets, is suffering from a serious debt crisis.
Chinese imports of wire rod are still mostly quiet, as offers have not budged from the relatively high range 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. Talk of the possible abolishment of the VAT rebate for many Chinese products, such as wire rod, has not put mills in the mood to cut prices, and they are unlikely to begin offering competitive import offers anytime soon. Instead, certain Western European countries such as Italy and Spain are more formidable competitors for Turkey for the soft US import wire rod market.