The surprising sideways pricing move for domestic scrap shocked many who predicted yet another increase, and the effects are already being felt in the longs market.
Overall shredded scrap pricing did not go up as anticipated, resulting in neutral raw material surcharges (RMS) for rebar, merchant bar, and wide flange beams. Domestic wire rod pricing is now expected to stabilize as well, which will likely clear up the murky demand picture--when wire rod prices were on a continuous rising streak, it wasn't clear whether any perceived upticks in demand were from seasonal restocking, price hike anticipation, or actual activity in end-use markets. If wire rod prices follow scrap sideways as expected, the real reasons for slightly increasing demand will become apparent.
Domestic mills are continuing to offer wire rod in the range of $32.00 to $33.00 cwt. ($705/mt to $728/mt or $640/nt to $660/nt) ex-Midwest mill, but there might be some resistance now that customers do not expect prices to rise. Mills don't have the scrap monster to point to anymore to explain price increases, so they will likely make deals to attractive customers, at least until "real" demand ramps up.
Import prices have also remained stable from last week. Turkish mills are still offering relatively high-priced wire rod at $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 offers are still falling between $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, although prices may go up soon in response to the recent iron ore developments in China's steel market.
Wire rod imports to the US continued to surge in March, according to the US Import Monitoring and Analysis System (SIMA); however, the orders placed for March deliveries preceded the substantial leaps in import pricing seen in the last month--it is unclear how those prices, which were met with much resistance, will affect import data in the coming months.
The latest import license data show that wire rod import permits totaled 123,784 mt in March, a hearty increase from the February preliminary census data total of 113,341 mt and well over triple the March 2009 census data level of 35,857 mt.
The top sources of imported wire rod during March were Canada (35,400 mt), Turkey (31,559 mt), Brazil (17,657 mt), Japan (9,132 mt), and Italy (8,585 mt). Of note in the import wire rod market is Mexico's total of 7,544 mt, a higher monthly tonnage level than any month in 2009.
