TORONTO Price hike
attempts by a number of U.S. wire rod mills appear to have
fallen apart due to a combination of weak demand from the
construction sector, increased imports and expectations of
lower scrap prices.
But while it appears the
increases did not stick, they may have served to keep domestic
prices from sliding much further, market sources suggested.
"Maybe the best defense (against falling prices) was a good
offense," one rod buyer said.
A second rod buyer agreed. "(The
increase letters) had more to do with a fear by some that they
needed to take a position to hang on to what they had, and they
didnt want to see further erosion," he said.
A number of U.S. wire rod mills
announced in mid-March price increases of $20 per ton ($1 per
hundredweight), including Keystone Steel & Wire Co.,
ArcelorMittal Long Carbon North America and Charter Steel.
Charlotte, N.C.-based Nucor
Corp., however, did not announce an increase, which some market
sources said may have contributed to other mills
inability to push through their own hikes. But others
disagreed, contending that Nucor generally does not set the
tone for price moves in the rod market and may have been used
as a scapegoat by other mills after they found their own
Despite the announced increases,
domestic wire rod prices have actually dipped slightly over the
past month, sources said. Prices for industrial-quality
low-carbon rod have eased to about $36.50 per cwt ($730 per
ton) f.o.b. mill, sources said, with a handful of buyers
reporting offerings from major mills as low as $35.50 to $36
per cwt ($710 to $720 per ton).
High-carbon rod prices also have
slipped slightly, easing to $40.50 per cwt ($810 per ton)
f.o.b. mill from around $41 per cwt ($820 per ton) a month ago,
although prices are said to vary depending on grade, mill and
Prices of cold-heading quality
(CHQ) rod have fallen further still, especially as major input
No. 1 busheling scrap in Chicago continues to take a hit,
sources said. CHQ rod prices were reported to have dropped to
$43.50 per cwt ($870 per ton) f.o.b. mill from around $44.50
per cwt ($890 per ton) previously, despite relatively robust
demand due to strength in the automotive market, which remains
much healthier than construction.
One driver behind the apparent
price softening is strong import volumes. A third rod buyer
said he initially accepted the higher prices on some recent rod
orders, a move he regretted later as it became clear that
increases were not generally holding up. "Availability has not
been an issue," he said. "And (imports) may have curtailed the
ability of (domestic) rod producers to push through some of the
increases. It effectively puts a cap on pricing and what they
can expect to get out of the market."
The United States was set to
import 118,807 tonnes of wire rod in March, according to
license data from the U.S. Commerce Departments Import
Administration, up 9.7 percent from preliminary imports of
108,340 tonnes in February and nearly double the 60,778 tonnes
imported in January. Some sources said that number could surge
further as the year progresses as an influx of material from
China is expected to enter the U.S. market in the May-June
timeframe. But others said the wave might slow after that,
given increased prices from overseas suppliers and the long
lead times and other costs associated with imports.
"A gap developed between
offshore material and (domestic material), and it certainly
stimulated import purchases," the first rod buyer said. "But
overall there is still a great deal of caution on the part of
rod buyers. They dont want lead times to get stretched
out too far on large percentages of their business. Volatility
is still out there, even if its not apparent right