NEW YORK The U.S. steel wire rod market is experiencing an early summer slowdown, with domestic mills and importers said to be fighting for dwindling business in a lackluster marketplace.
"Theres a bit of a slowdown. Demand has definitely slowed down some and it has all been accompanied by higher import activity mainly from China," said one trader. "People have foreign material in the pipeline already and theyre seeing their demand come off a bit. Its creating a bit of hesitancy in the marketplace."
With domestic demand said to be taking a breather, buyers said some U.S. mills have become more aggressive in their pricing.
"There are a lot of funny deals going on from the domestic mills for May," said one buyer. "Theyre offering me $5- to $10-per-ton discounts here or there. Other mills are pushing me real hard to take steel. I think theyre afraid prices are going to erode even more."
A second trader confirmed the demand slide. "What Ive seen is that customers have become very quiet lately. The (domestic) mills are eager to move to the buyers," he said.
In addition to a pullback in demand, a steady flow of imports is also keeping domestic mills on their toes price-wise, sources said, citing competitive prices on wire rod from China and Turkey in particular.
"The lowering of the price is a way of the domestics trying to entice people to not buy imports," the buyer said.
License applications for April were poised to hit their highest figures in more than a year, according to data from Commerce Departments Import Administration, rising 27.5 percent to 114,008 tonnes from March preliminary figures of 89,424 tonnes. Those orders, set to arrive in April but booked in late December and early January, were led by strong imports from China, Turkey and the United Kingdom.
"I dont know how much the Chinese rod has penetrated the market, but the (U.S.) mills are having a bit of a wake-up call right now because of the material coming in and the stats. Its a bit of a delayed reaction," the second trader said.
According to trader and buyer sources, imported material is still selling at a slight discount to domestic product, making it an attractive option. Imported rod to the Port of Houston sold at around $665 to $700 per short ton this past week, market sources said, down slightly from mid-April prices of $680 to $710 per ton. That compares with domestic prices of around $710 to $720 per ton, depending on the buyer.
"Looking around the world, we can see everyone else slowing. You look at Turkey and theyre not able to sell that much into the European market. China has lots of extra tons," said a second buyer. "Imports are coming in and theyre going to continue being very strong. The domestics missed the first boat."
The lowest-priced imports are said to be from China. Turkish material, meanwhile, is selling at a $15- to $20-a-ton premium to Chinese rod, making it somewhat less competitive but still attractive compared to most U.S. material, sources said.
But even with foreign material selling at a discount, the slowdown in domestic demand is being felt by importers as well, sources said.
"Were finding some pockets of interest. Business is slow but were moving along," the first trader said. "About two months ago, we were booking a lot. Business has pretty much stopped."