While the overwhelming sense of the market is gloomy, there are a few things to remember.
First, the 4th quarter is typically the slowest quarter and December is usually very slow, even in a good year. Because of the Christmas holidays and New Year’s celebrations and other international celebrations, a good two work weeks are usually lost. In many cases it is more than two weeks. This year many steel mills have extended their holiday shutdown schedule due to a lack of orders. Here are some of the wire rod mill’s shutdown schedules.
Ivaco-Heico Closed Nov 29-Jan 5th
Gerdau Closed Dec 13 – Jan 5th
Keystone Closed Dec 13 – Jan 5th
Georgetown Closed Dec 2 – Jan 12th
Sidbec Dosco unconfirmed- closed until Jan 12th
Secondly, watch scrap pricing, as it is rising. It was reported here two weeks ago that November scrap rose about $100 pgt by the end of the month. Mills may not be buying, but scrap dealers are not willing to sell for published pricing and are asking for a premium. When mills return to production and resume scrap purchasing, expect further increases.
Wire rod buyers a have been reducing their inventory levels for the past 2 to 3 months. In the short term, they may find lead times from mills extended due to their shutdowns. When the mills do return to regular production schedules, and are faced with higher scrap pricing, they will be unable to reduce pricing further than they have, and may actually increase some prices.
Interesting market we have seen in 2008. The pricing pendulum swung too far to the high price side for the first 9 months, and has quickly swung back to the lower price side in the last 3 months. In the first quarter of 2009 look for the pricing to stabilize somewhere in the middle of the range, but certainly up from the recent low levels.