The downturn in the troubled US wire market has continued to get worse since last month, as prices drop and customers vanish.
Many wire companies are working through their highest-priced rod inventories and are not getting very many new orders while their sales prices are decreasing. To stay afloat, wire drawers are cutting capacity and laying off workers, similarly to the wire rod mils.
"Down the road, if things don't improve, by the end of Q1 or Q2, some of these smaller wire companies might start going out of business," one rod supplier told SteelOrbis this week. He told SteelOrbis that he does not have any wire company customers that have not laid off workers in recent weeks.
Major wire producers like Keystone Steel & Wire that do temporary shutdowns in the second half of the year for routine maintenance have yet to resume production after the maintenance work. After first shutting down in October, the company announced last week that production at both its rod and wire operations would remain shut down. Some production will resume the week of Dec. 8, but it is not yet known when full production will resume. Keystone executive VP Vic Stirnaman said, "For now, in general, the whole plant is in shut down. We have annual shut downs for repairs but because of business conditions we are still shut down," he said.
Insteel Industries, a national manufacturer of concrete reinforcing wire and strand wire, has also downsized its workforce at each of its 7 plants across the country, citing "the total meltdown in the market."
As SteelOrbis reported last month, wire prices have dropped by at least the same amount that rod prices have fallen, losing at least a third of their value in a matter of months. This situation has continued since last month as rod prices have continued to drop. Some companies have even lowered prices by more than rod has dropped, just to get the edge on their competition.
At the same time, wire drawers are only able to drop their prices by a certain amount before they start to lose money, as the raw materials they are using were purchased when prices were higher. Also, many have ordered rods at higher prices that have not arrived yet.
In addition to their inventory cost issues, on the demand side, wire companies have been especially negatively affected by the economic downturn, as their key downstream markets, such as automotive (a lot of wire goes into car tires) and construction (steel wire reinforcing products like mesh are used for for concrete construction applications), have been very hard-hit. US building mesh prices, SteelOrbis learns, have dropped by at least another $5 to $10 per 10 gauge roll since last month, depending on the supplier, from their previous levels of $85 to $87 per roll in late October (in the Texas market).
US wire drawers are thankful that, at least, wire imports have not increased with the weakening markets. License Data from the US Steel Import Monitoring Analysis (SIMA) show that in November, wire drawn tonnage totaled 33,279 mt, the lowest monthly level in over a year. The most import wire drawn tonnage in November came from: Canada (9,443 mt), China (6,522 mt), Mexico (5,317 mt), Japan (3,446 mt), and South Korea (2,091 mt). Preliminary Census Data for October showed the second-lowest monthly wire drawn import total of the year, at 44,421 mt. However, Chinese imports of pre-fabricated products that are made out of wire and are still subsidized by the Chinese government, remain for US wire and finished wire product manufacturers.