NEW YORK Domestic steel wire rod mills have already announced to many of their customers that they are raising rod prices for August shipments, but rod buyers are skeptical the increases will stick as many this past week said they successfully squeezed out prices from suppliers at lower July shipment quotes.
"People saw the increase and they were able to jump onto July (rolling) schedules," a wire rod buyer on the East Coast said. "Everyones taking advantage of short lead times."
AMMs wire rod prices remained unchanged this past week, with mesh-quality rod transacting at around $640 per ton ($32 per hundredweight) f.o.b. mill, industrial-quality wire rod selling at $650 per ton ($32.50 per cwt), high-carbon wire rod trading around $700 per ton ($35 per cwt) and cold-heading quality selling at $740 per ton ($37 per cwt).
These prices remain at a several-month low, as low scrap input costs at the mills and mediocre demand have recently kept wire rod tags under pressure. Rainy weather conditions in different regions of the country have slowed construction spending and prevented concrete reinforcing mesh and prestressed concrete (PC) strand sales from sparking high rod demand, sources said, while general economic malaise and import pressure has hampered wire sales for other applications.
"Its not a normal summer market. Its a little softer than wed normally expect. Most of our energy in terms of volumes and pace of business takes place in the spring and summer, but business from our perspective has been soft," said an industrial-quality and high-carbon rod buyer in the Midwest.
A mesh-quality and high-carbon wire rod buyer in the South agreed that the summer has been unusually quiet thus far.
"Weve definitely seen a deceleration in business. This should seasonally be the peak and its really not impressive at all," he said. "I think business is overall really weak."
With the overall market soft, rod buyers were nearly unanimous in saying they dont believe the mills pricing increases for August shipments will fully stick once the round of August purchasing begins. With demand so tepid, the mills are unlikely to hold out on pricing and recover the increase in scrap prices, buyer sources predicted.
"As a supporter of the domestic wire rod industry, Im all in favor of them trying to cover their cost increases, but I think the market is soft and it might be difficult," the Midwest buyer said.
"Theres no strength for it. It wont fly," a second rod buyer in the Midwest said of the August increases.
Rod buyers said they expected prices to come down in the next few months.
"I promise you (big players) wont pay what the product of that shredded index would have indicated," the East Coast wire rod buyer said. "I think its going to be kind of a one-month spike (in prices). Everyone feels its going to go down over the next couple of months."