US wire mesh makers say that business has slowed even further in the last month, which has been a sour disappointment for these companies as the summer months are typically a busy time for the mesh market.
On the whole, sources say that the overall building mesh business in the US is down by between 30 and 35 percent from last year. The Mexican mesh market is also unusually slow.
The average market price for a roll of 10-gauge building mesh has decreased by $2 to $4 per roll over the last month, with most offers now ranging from $50 to $52 per roll.
A Gulf-region mesh maker told SteelOrbis this week, "There is a large supply of finished product on the ground and very few places to go with it, which lends toward a down market."
The main culprit for the high inventories is the slow demand from the slumping housing sector. And unfortunately, most mesh makers don't see business improving anytime soon.
On the bright side, the market for bright basic wire may eventually see some improvement, as China's VAT rebate cancellation for wire rod and VAT rebate cutback for wire has caused Chinese wire offering prices to rise.
Domestic wire producers hope that the VAT rebate cutback will help stem the flow of Chinese wire, but so far this year, wire imports have kept up a steady pace. Final census data from the US Import Administration show that year-to-date June 2007, wire drawn imports (which primarily include bright basic wire and galvanized wire) totaled 364,295 mt, compared to 409,192 mt for the same period of the previous year.
Next to Canada, China remains the largest import source, shipping 89,003 mt of wire drawn tonnage to the US from January through June 2007, compared to 88,760 mt during the same period of the previous year. Other major wire drawn import sources for the US from January through June 2007 include Mexico, at 53,195 mt; Japan, at 28,059 mt; and Korea, at 19,843 mt. Preliminary data for July and August do not show much of a slowdown either, with a total of 61,211 mt imported in July and 24,479 mt imported as of August 14.
Sources say that domestic wire prices have not really softened in the past month, though business is quite slow. Overall, the pricing trend for domestic wire is still down due to the weak demand and softening domestic rod prices. And despite the higher import wire prices being offered, most finished wire product imports from China are still subject to a VAT rebate, so imports of these products continue to arrive as well.
However, domestic wire product makers are starting to fight back against Chinese wire products, as we saw in the antidumping suit filed against Chinese nails in June. More recently, M&B Wire Hangers filed an antidumping suit against Chinese wire hangers earlier this month. ( M&B Hangers files AD petition against Chinese wire hanger imports)
M&B president Mr. Magnus told SteelOrbis that M&B must fight back so that it doesn't go the same way as the rest of the domestic wire hanger industry – out of business. While some of the VAT rebate for Chinese wire hangers was recently cutback from 13 to five percent, these products are not subject to any export tax like wire rods from China. Mr. Magnus told SteelOrbis that Chinese wire hangers can be purchased at prices below the cost of raw materials in the US. The petition filed by M&B states that Chinese wire hanger imports surged by more than 130 percent from 2004 to 2006, while during the same period prices of these imports fell by almost 30 percent.