It should come as no surprise that US wire and wire mesh prices are continuing to move upward, following the seemingly never-ending string of rod price hikes seen this year.
After the significant price increases domestic rod mills announced for June and July shipments, wire drawers are now setting their price hikes for July, citing their increased raw material costs. Taubensee Steel and Wire will raise their prices by $70 /nt ($77 /mt or $3.50 cwt.), effective with shipments June 30, while Keystone has announced a nine percent increase for their wire products, effective July 19. Meanwhile, ArcelorMittal will hike their wire prices by $80 /nt ($88 /mt or $4.00 cwt.) effective July 14, following a $120 /nt ($132 /mt or $6.00 cwt.) increase that went into effect a month earlier. Though the wire increases for the July period are at least only in double-digits this time around, they are still quite significant considering that wire demand is not great.
Wire companies say that demand for certain products such as drawing wire and mattress springs (Chinese imports of which are subject to an antidumping investigation) is still solid, although mesh and chain link fence demand is pretty lackluster because of the slow construction sector. Still, wire rod costs continue to rise due to the tight wire rod supply, so wire prices are expected to continue their ascent.
Some rod imports are now coming through from China, although all import rod offers are still above the domestic level. Even if domestic rod prices were to stop rising, import rod prices are not expected to come down anytime soon, making it very unlikely that US wire prices could start to decrease in the near future.
As one rod buyer and wire drawer told SteelOrbis this week, "Because of increases in wire rod prices as well as increases in fuel, wire companies are compelled to keep up with the increase in their cost structure. Wire and wire product prices should continue to increase as a function of these cost increases."
Looking forward to August, it is almost a certainty that US wire drawers will raise prices yet again, as domestic rod producers are planning another price hike in attempts to get the US price level closer to the international level. And with shredded scrap prices expected to bounce back this month, mills should have the perfect justification for such an increase. With no cheaper import alternatives, mills may just have enough momentum to raise prices in September as well.
On the wire mesh side of the market, prices continue to rise as well, with mesh makers in the Gulf and Southeast now aiming for $92 to $94 per 10 gauge roll of mesh, reflecting an increase of nearly $10 in the last month. End-use mesh demand, however, is reportedly not too strong, and mesh makers are struggling to push through the increases. Ultimately, the buyers do not have a choice but to pay them though, and the prices continue to rise. Perhaps the word "stagflation" would be a good description of the current market situation.
In import news, since last month, the US Department of Commerce has made its final antidumping (AD) determination in the investigations of steel nails from China and the United Arab Emirates. Although the DOC found a 0.0 percent dumping margin in the case against the only UAE respondent and therefore terminated the investigation, they found that Chinese nail producers made sales to the US market at below normal market value. Most of the Chinese producers named in the AD determination received a 21.24 percent dumping margin, though some received as high as 118.04 percent. The US ITC is expected to make its final determination on July 9, 2008.
Although US wire drawers are still somewhat concerned about finished wire product imports from China, especially for certain commonly imported products, the US government continues to be very receptive to the domestic drawers' desire for action against Chinese government-subsidized finished wire product imports, and it is likely that the antidumping rulings against these imports will continue.