US wire rod buyers considered import offers last week as negative scrap pricing sentiment quelled interest in domestic rod.
During meetings at the American Wire Producers Association Government Affairs Conference in Washington last week, a Southern US rod buyer said mills did not balk during discussions about lower prices. "They said they'll go back and look," he said.
The outlook for US rod pricing is weak, the rod buyer said, citing softening US scrap prices and competitive import options emerging -- particularly Russian material.
"We're looking to a weak start to the busiest time of the year, the first quarter or first half," the rod buyer said. His current industrial-quality rod price is about $495-$505/st ex-works, but smaller buyers were likely paying closer to $515/st, he said.
Buyers said import offers were not firm last week, but indications for January and February arrivals were $40-$60/st below current domestic pricing.
The Platts weekly mesh-quality rod price assessment on Friday edged down to $500-$530/st ex-works from $510-$530/st the previous week.
A second rod buyer agreed that imports dominated rod price discussions, noting that there are new traders interested in the US market.
"With respect to new players, I'm actually more wary of the new traders than I am the new [foreign] mills," he said. There are some traders who primarily traded flat products and OCTG "who have nothing to do and are dabbling in wire rod."
Domestic mills largely use scrap-based pricing mechanisms, and the buyer said he would not be surprised if at least one mill attempts to cut the tie between rod pricing and scrap. His said mesh-quality rod pricing is about $510/mt ex-works.
A mill source said sales volumes are down this month, partly because of aggressive domestic competition but also buyers' reluctance to place orders. Uncertainty is going to continue to negatively impact the market, he said. Another Southern rod buyer said he had not purchased any domestic or imported rod last week, and his domestic price has not changed. On an ex-works basis, the buyer said his mesh-quality rod price was under $520/st, unchanged from earlier in the month.
The buyer planned to book imported wire rod in about two weeks because he is looking for material arriving in January. The last quote he received was for Turkish mesh-quality rod around $420/st on a loaded truck basis arriving in December.
Three traders said last week that Turkish low-carbon rod offers were about $415/mt ($376/st) CFR Houston for December arrival, and one said there was rod available from another origin that is $20/mt ($18/st) below Turkish offering levels.
A Midwestern rod buyer said his domestic industrial-quality rod price quotes of $517-$530/st ex-works were unchanged last week, but he expects prices will fall next month with scrap.
Source: Platts
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