NEW YORK Wire rod offers from China and Turkey have edged up in price slightly in recent weeks, leaving those imports with a less-competitive edge due to a narrowing price gap with domestic material, traders say.
"Foreign offers have inched up a little bit. Turkey has been out of the U.S. market for some time, and the Chinese have been successful in inching up their prices by $10 to $15 (per ton)," one trader said. "The Chinese are definitely feeling a little more bullish."
A number of buyers and traders said earlier this year that large shipments of wire rod from China were set to enter the United States as early as the end of the first quarter (AMM, March 16). Market sources cited relatively low Chinese prices coupled with a number of domestic mills raising prices by $20 per ton in mid-March, which pushed some buyers to switch to foreign material.
"I know the domestic mills arent very happy with whats going on with imports, and theyre doing all they can to protect pricing," one buyer said. "Yet the guys who came out with increases kind of set everything in motion. They got people looking offshore again."
Monthly rod imports reached 56,038 tonnes through April 12, according to import license data from the U.S. Commerce Department. Much of that gain was led by 21,936 tonnes from China, which shipped just 230 tons in all of 2011. March license data put U.S. imports at 119,311 tonnes, led by strong gains from Turkey.
"Theres been a new wave of offers. The previous months bookings were done at a lower level," the trader said. "Now the Chinese are trying to lift them. Theyre going back out into the market with the pricing to see if they can get any interest. It will be interesting to see how long it can go for."
Rod transactions at the Port of Houston were around $680 to $710 per short ton, market sources said, compared with domestic prices of $730 per short ton.
Despite still-lower prices for imports, not everyone was feeling threatened.
"The import competition is definitely regional. Some of the mills are in better shape," a second trader said. "The ones in the South, like Gerdau (Long Steel North America) in Beaumont (Texas), are more affected by Chinese imports coming into Houston than those in the Midwest."
However, even with a narrowing gap, some sources said there is still enough interest in foreign material. "Their hesitation is with the three-month lead times. Overall, the price gap has gone back to attractive levels to be considered (over) the domestic pricing," the second trader said.
Traders say the flow of imports from China isnt likely to slow in the near term due to the overall economic slowdown in China. "The (economic) slowdown is leaving the Chinese with some capacity and theyre looking for a home for it. I dont see it changing anytime soon," a third trader said.
Going forward, traders and buyers believe there will be more foreign product hitting U.S. shores despite increasing price competition.
"Theres decent business out of China and Turkey right now, even if they raised their prices to the U.S.," the third trader said. "U.S. mills are becoming more cautious because theyve realized they lost out a fair bit."