The US wire and wire mesh industry continues to face rising rod prices and lack of rod sourcing options.
Wire and mesh producers continue to raise their prices to reflect the domestic rod price hikes. However, wire and mesh prices are not rising quite as fast as rod prices; due to the flat end-use demand for most wire products, wire producers aren't able to push through their cost-based price hikes as quickly as they would like to.
Wire companies that have a lot of contracts on the mesh side are now regretting making these arrangements, as the fear of a serious rod shortage is becoming more and more real. With domestic rod mills' lead times stretching out longer and longer, domestic production not going at full capacity, and import options getting fewer and more expensive, wire producers are really getting squeezed. That said, wire customers will ultimately have to pay the wire producers' price hikes as import wire is no longer a real option, since Chinese wire offers are now at a high premium to domestic prices and are not as plentiful as they once were.
Import data from the US Import Administration show that in February 2008 low carbon, drawn wire imports were relatively low, arriving primarily from other NAFTA countries. These imports totaled 23,973 mt in February 2008, with the most tonnage coming from Mexico, at 7,939 mt; followed by Canada, at 7,882 mt; Japan, at 3,086 mt; and China, at only 2,321 mt. Meanwhile, Chinese wire rod exports to the US totaled only 1,028 mt in February 2008, down from a high of 161,300 mt in July 2006, and from the 2007 monthly average of 44,400 mt.
While Chinese rod and wire imports are at low levels, wire companies are still feeling China's presence in the form of downstream wire products which are still arriving at competitive prices, leading many US customers to buy finished wire product imports instead of domestic wire or domestic finished wire products. The domestic companies aren't taking their loss of market share sitting down though - There are currently several open antidumping cases against Chinese wire products, including Vulcan Threaded Rod's case against Chinese threaded rod imports, and M&B Hangers' case against Chinese wire hangers.
An important ruling has recently been made in the wire hangers' case: the US DOC has found significant preliminary dumping margins for the mills under investigation, ranging from 33.85 percent (for one mill) to 221.05 percent (China-wide rate). Although the final dumping determination won't be made until June 2 if there are no extensions, or July 31 if the investigation is extended, it is safe to say that the DOC's preliminary ruling is a major victory for the domestic industry.
In regard to the threaded rod case, the US DOC has initiated its AD investigation based on the petition filed March 5, finding that the petition demonstrated sufficient evidence and met the statutory requirements for the initiation of an AD investigation. It is still early on to say what will happen, but the DOC's initiation of the investigation is a good sign for the US producers.
Moving on to the wire mesh side of the market, most mesh makers did indeed raise their prices to $72 per roll of 10-gauge mesh as of mid-March, as we announced they would in our last report. However, mesh makers tell SteelOrbis that some of the smaller competitors are still quoting at lower numbers (in the high $60's /roll). All offers are expected to eventually rise past the $70 /roll level, as mesh makers have to continue raising their prices with their rod costs in order to make a profit. However, the fact that not all mesh makers have raised their prices to this level yet may show the market's reluctance to accept these price hikes because of slow demand.