Mr. Duoto started his speech with a brief look at the state of the US economy. He remarked that GDP expanded at an annual rate of four percent in the second quarter of 2007, reflecting higher activity in the areas of international trade and business investment. GDP growth in the third quarter is expected to be only two percent and less than two percent in the fourth quarter.
Mr. Duoto proceeded to give a breakdown of US construction spending (total of $1.1 trillion) as follows: residential - $385 billion, non-residential - $346 billion, US government - $289 billion. In July 2007, spending on homes fell for the 17th month in a row, while non-residential construction rose in July to an all-time high. In the same period, construction of shopping centers, office buildings and hotels all showed increases with spending on state and local government projects also at all-time highs.
The figures for US rebar and wire rod imports over the last few years are as follows:
Year |
Rebar imports (nt) |
Wire rod imports (nt) |
2004 |
1,916,874 |
3,732,750 |
2005 |
1,424,400 |
2,467,148 |
2006 |
2,587,443 |
3,017,207 |
2007 YTD through July |
1,144,304 |
921,944 |
In 2007 up to July, the largest supplier countries of rebar to the US were Turkey (26%), Taiwan (18%), Mexico (13%), Japan (8.2%), Brazil (8%), and Malaysia (7.2%). In the same period, the largest supplier countries of wire rod to the US were China (45%), Canada (20.6%), Brazil (9.4%), Trinidad & Tobago (7.7%) and Japan (5.6%).
Mr. Duoto continued his speech by listing the factors which have the most influence on the current US rebar and wire rod markets. In the US rebar market, the most influential factors are as follows:
- Large unsold positions by traders and distributors.
- Distributors are selling below their average cost as well as below their replacement cost.
- Import pricing
- Currently, there are 3-4 months of inventory
- Demand is much weaker than expected
In conclusion, Mr. Duoto listed the most important factors in the US wire rod market:
- Import prices are higher than domestic prices for low carbon.
- Weak demand due to housing and automotive markets
- Weak US dollar
- The cancellation of Chinese tax and VAT rebate
- Higher ocean freight charges