NEW YORK Domestic steel wire rod prices have dropped back to early July levels after a brief boost late last month, dimming hopes for more robust activity in the second half of the year.
Poor demand and import competition have weighed down domestic prices, wire rod mills and rod buyers said. The wet summer on the eastern side of the Mississippi has limited construction activity, leading to poor demand for construction-related wire rod grades, and a mediocre economy has bogged down activity in many industrial applications.
"This rain has killed us. Everything is wet, construction has been delayed. Theres projects out there, but its all been delayed," a mill source said. "Theres not a whole lot of optimism for the rest of the year. We need something to turn things around."
"We are behind where we were last year and we dont see things picking up in the immediate future. Im beginning to wonder now if the market isnt as good as we thought," a wire rod buyer said. "We have been seeing growth since the recession, but weve been very disappointed this year."
Small and medium-sized buyers saw prices increase $10 to $15 per ton in July, but then drop about $10 on most grades during the first half of August as mill prices for many customers roughly followed the change in AMMs Chicago consumer buying price for shredded automotive scrap (amm.com, Aug. 12). Larger buyers of lower-carbon wire rod mostly saw their prices unchanged from July to August.
"I would say without reservation that anyone who buys meaningful tons of low carbonthe bigger-sized guythey didnt see an increase," a second wire rod buyer said. "Some of the smaller guys definitely paid. Many of the mills passed (the scrap increase) on to the smaller, medium-sized guy, so probably theyll get the benefit of (the scrap decrease) this month."
Wire mesh-quality rod is transacting at around $640 per ton ($32 per hundredweight) f.o.b. mill, down from $650 per ton ($32.50 per cwt) previously; industrial-quality wire rod is at $650 per ton ($32.50 per cwt) vs. $660 per ton ($33 per cwt); and high-carbon wire rod is around $700 per ton ($35 per cwt) vs. $715 ($35.75 per cwt). Cold-heading quality wire rod, however, rose to $770 per ton ($38.50 per cwt) from $755 per ton ($37.75 per cwt) previously following a rise in AMMs Midwest No. 1 busheling price.
"Rod prices are kind of giving a little right now," a third wire rod buyer said. "We had a (mill) guy bend over backwards for us. He knocked us down a dollar. Theres deals going on out there."
Rod mills have been forced to soften their prices partly because of tight pressure due to large, cheaply priced imports, particularly from China, sources said.
Buyers, traders and mills reported that delivered prices for Chinese low-carbon material are around $70 per ton cheaper than domestic material, and high-carbon grades are as much as $100 per ton cheaper than domestic material.
"The good news is that nobody is expecting bad news. Nobody is expecting things to get any worse, except for the rod mills," a second mill source said. "We are worried about so many imports coming in."