Specialty grade shortage sends US wire prices soaring

Thursday, 17 March 2011 00:44:53 (GMT+3)   |  
       

Increased demand for specialty-grade wire coupled with decreased supply has pushed up prices and sent buyers scrambling.

Demand for specialty-grade steel wire has apparently outpaced production, attributed to strengthening manufacturing markets in the US.  Order books are bulging for major equipment manufacturers Caterpillar and John Deere, for example, as the companies ramp up exports to China and developing nations in South America.  As a result, welding wire is virtually impossible to find, and domestic US prices have reached up to $50.00 cwt. ($1,102/mt or $1,000/nt) ex-mill.

Buyers of other specialty grades are finding equal difficulty acquiring product, compounded by the disaster situation in Japan--a major source of specialty wire for electronics and tire cord for the automotive industry.  Current domestic prices for high-carbon wire range from $40.00-$41.00 cwt. ($882-$904/mt or $800-$820/nt) ex-mill, while PC strand prices are closer to $44.00-$45.00 cwt. ($970-$992/mt or $880-$900/nt) ex-mill.

However, the shortage situation is not entirely limited to specialty grades.  Wire rod buyers also report a tightening of supply, which helped domestic mills easily push through a $1.50 cwt. ($33/mt or $30/nt) price increase announced just over a week ago.  Currently, wire rod prices are in the range of $37.50-$38.50 cwt. ($827-$849/mt or $750-$770/nt) ex-Midwest mill.

As for wire mesh prices, 10 gauge wire mesh rolls are now being sold for approximately $73-$74/roll on the East Coast, while prices in the Gulf Coast are closer to $69-$71/roll, with the expectation of a jump into the $72-$75/roll range in the next few days.  Once the recent wire rod price increase fully translates into mesh prices, producers are expecting resistance to higher prices in light of the current construction market.

Construction demand has been soft so far in the first quarter of 2011, and many mesh producers expect that the upcoming spring construction season will be similar to 2010--not terrible, but not strong enough to push the recovery along into full improvement.  As a result, mesh companies are keeping their inventory levels lean, believing there is too much risk in having too much stock on the floor.  However, even if they wanted to stock up, there is not much material available anyhow.

Additionally, wire mesh companies have become less interested in imported wire rod--according to one East Coast mesh producer, there are not many opportunities out there, and most existing offers are too close to domestics to be worth serious inquiry.  Current wire rod prices from Turkey are in the range of $36.75-$37.75 cwt. ($810-$832/mt or $735-$755/nt) duty paid FOB loaded truck in US Gulf ports; consequently, while the ratio of domestic to import purchases is typically 80/20 percent, the ratio is now closer to 90/10 percent.

While current wire rod shipments into the US reflect the robust import purchasing activity a few months ago (when domestic prices soared and imports stayed competitive), figures from the US Import Monitoring and Analysis System (SIMA) will likely show diminished levels in April and May.  The same situation is predicted for drawn wire imports, which are currently at less than half of February levels.  According to SIMA, the US has imported 20,060 mt of drawn wire so far in March, compared to 51,810 mt in February.  Mexico, Canada, China and Japan are the top sources of imported drawn wire, but those rankings will most likely shift considerably in the next few months, on account of Mexico's pending anti-circumvention issues and the virtual shut-down of Japan's steel industry.


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