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Mar.28.2024 1USD=7.0948RMB
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Downward Pressure Mounts Against US Wire Rod Prices

https://en.steelhome.com [SteelHome] 2019-01-17 11:18:34

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Wire rod prices remain flat in the United States for both domestic and imported material, although downward pressure has emerged in January from declining raw material costs and weakening demand.

Fastmarkets' assessment for industrial quality low-carbon rod held at $39.25-41.25 per hundredweight ($785-825 per short ton) fob mill on Tuesday January 15, with imported wire rod steady at $744-762 per ton cfr port of Houston.

No signs of November mill hikes taking hold
Nucor Corp, Optimus Steel, Commercial Metals Co and Keystone Steel & Wire announced price increases of $30 per ton ($1.50 per cwt) in November, and sources who spoke with Fastmarkets indicated that those increases have not impacted spot market prices this month.

There is no sign of November's mill price increases taking effect, one distributor said, adding that "there are a few deals out there" in the spot market.

"I have not heard about them going through," a trader said.

"Demand isn't good, that's why some people are getting discounts," a second trader said.

This source heard from customers that discounts were available for purchases of 1,000 tons or more, while those making purchases of 100 tons or less would be paying November's increase.

That said, the second trader maintained that current spot prices remain within a range of $39.25-41.25 per cwt fob.

"That's the range," this trader added.

This range tracks what Fastmarkets heard from other wire rod sources.

In terms of other crucial market dynamics, inclement weather in the southern US has caused demand from the construction industry to slow, the distributor said.

At the same time, market participants have inventory available and mills are working hard to maintain prices while demand is softening, this source added.

January could be the last month that spot market prices will hold at current levels due to downward pressure from declining scrap costs and the softening in demand, a wire rod buyer told Fastmarkets.

"We're kind of in a lull where there's some softening, kind of a reverse of what everybody thought was going to happen," this source said.

The price for Chicago shredded auto scrap fell by $30 per gross ton in January, the first time that the ferrous scrap market has started the year in negative territory since 2006.

Indeed, US shredders are bearish on the February market, signaling that further downward pressure could be felt next month.

That said, sources previously told Fastmarkets that since the US Section 232 tariffs were implemented against steel imports on March 1 of last year, wire rod and scrap prices have decoupled from each other. Whether wire rod and ferrous scrap prices will "recouple" in the near term remains unclear.

"People are waiting to buy to see if prices go down," a second buyer said, adding that distributors are waiting for concrete signals on pricing.

In terms of lead times, the first distributor said he was fairly confident that he could obtain material in four weeks or less.

"They've slackened up," this source said.

"We can hit every rolling cycle right now," a third buyer said, adding that current lead times are between three and four weeks or less.

Similarly, other sources agreed that lead times currently range between three and four weeks.

Limited import activity to start 2019
On the import side, the first trader heard an offer for imported wire rod from a Southeast Asian country for $595 per short ton cfr, excluding the Section 232 tariffs. Including the tariffs, that number comes to $743.75 per ton cfr.

The second trader said he was confident that this offer came from Vietnam, confirming that he had seen the same price for Vietnamese material. This source also said that offers for German, Greek and Egyptian wire rod were available as well.

The first buyer source had seen offers for Vietnamese and Egyptian wire rod around $595 per ton cfr, excluding the tariffs, but did not find either offer compelling enough to pursue.

"In both cases we didn't buy because they were too close to domestic prices," this source said. "We need a bigger spread to take those kinds of risks."

Wire rod import data was not available from the US Department of Commerce's Enforcement and Compliance division on Wednesday due to the ongoing government shutdown.

source: fastmarket
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