NEW YORK Domestic wire rod prices have slipped slightly over the past two weeks as scrap prices weakened and demand remains soft.
AMMs price for mesh-quality low-carbon wire rod has eased to $640 per ton ($32 per hundredweight) f.o.b. mill from $650 per ton ($32.50 per cwt) in early June, while industrial-quality low-carbon rod is now at $650 per ton ($32.50 per cwt), down from $660 per ton ($33 per cwt). High-carbon wire rod is $700 per ton ($35 per cwt), down from $710 per ton ($35.50 per cwt) earlier this month, and cold-heading-quality material is $740 per ton ($37 per cwt), down from $750 per ton ($37.50 per cwt).
The lower steel prices come on the heels of an approximately $6-per-ton decrease in AMMs Midwest Ferrous Scrap Index for shredded scrap earlier this month (amm.com, June 10).
"When you follow scrap, its universally down," one rod buyer said. "Its been a deflationary trend. Of course, thats going to erode margins at the mills."
Rod buyers in most sectors, including construction and industrial products, reported tepid demand in the past few weeks, with the one bright spot being automotive. Rod buyers producing for auto end-users, as well as rod mills with cold-heading quality capabilities, have seen strong sales compared with the rest of the market, sources said.
The auto industry has seen a strong recovery since the recession, with U.S. light vehicle sales expected to reach 15.4 million units in 2013, up about 6 percent from 14.5 million vehicles last year, Oxford, England-based auto industry forecasting service LMC Automotive Ltd. said. In 2012, auto sales rose 14 percent year on year.
"The real answer is transportation. Thats the main thing on the horizon that can turn things around," a one rod mill source said. "But I dont know how long even automotive can hang in there because theres some data that that might be cooling a bit, and thats the biggest thing keeping us going."
Meanwhile, some rod buyers have planned shutdowns for a week in July, sources said.
"A couple of my guys are taking a week down in July," the mill source said. "Theyre taking vacation maintenance. Obviously, if you were super busy you wouldnt be doing this."