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
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
"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."