Continuous high demand for higher grades of wire in the US have kept prices steady, but the still-floundering construction market is putting pressure on low carbon wire.
US domestic demand for high carbon wire has remained strong in the last month, mostly due to the manufacturing sector; according to the Institute of Supply Management (ISM), the fabricated metal products, transportation equipment and machinery sectors all experienced growth in August, resulting in a steady trend for most high carbon wire products. High carbon grade 1065 prices in the US domestic market are approximately $40.00-$42.00 cwt. ($882-$926/mt or $800-$840/nt) ex-mill, reflecting no change in the last month. However, tire cord quality wire prices have increased in the last month, by about $1.25 cwt. ($28/mt or $25/nt), putting most prices in the range of $44.25-$46.25 cwt. ($976-$1,020/mt or $885-$925/nt) ex-mill. The increase is not surprising, considering that both US auto production and sales have been strong throughout late summer.
Low carbon wire, on the other hand, is under continuous pressure from a vulnerable US low carbon rod market. After a few weeks of minor downticks in spot pricing, US wire rod has stabilized at the level of $36.75-$37.75 cwt. ($810-$832/mt or $735-$755/nt) ex-mill, as mills are fighting to stave off the price slippage. Most of the pressure is coming from demand activity, which is still depressed and doesn't show much signs of an uptrend anytime soon. According to US government data, housing starts declined in July, as did construction spending.
One of the hardest hit sectors of lackluster construction activity is the wire mesh market, which has seen demand slow down from already-weak levels in the last month. However, because mesh prices take about a month to react to wire rod prices, 10 gauge mesh roll prices are still in the range of about $73-$75/roll on the East Coast, and closer to $70-$72/roll in the Midwest. Furthermore, mesh producers report that due to the current construction data news and other pessimistic economic factors, customers are being very conservative in their purchases, putting pressure on producers to be flexible with their pricing.
As for imported wire, activity remains lackluster in the low carbon sector, while high carbon import activity is still lively, especially after Japanese specialty wire producers have nearly fully recovered from the devastating earthquake and tsunami in March. Import low carbon wire rod prices from Turkey are currently too high for US buyers to take seriously, and with hints that Turkish mills will raise prices after returning from the Ramadan holiday, the downtrend in low carbon wire rod import activity will likely continue. Currently, import offers are in the range of $37.25-$37.75 cwt. ($821-$832/mt or $745-$755/nt) DDP loaded truck in US Gulf ports.
According to license data from the US Steel Import Monitoring and Analysis System (SIMA), overall wire rod imports to the US totaled 57,255 mt in August (as of August 30), compared to 78,336 mt (preliminary census data) in July, with tonnage originating mostly from Canada and Turkey (25,663 mt and 12,210 mt, respectively). Meanwhile, imports of higher-grade and specialty wire rods from Japan and Brazil totaled 5,920 mt and 7,140 mt, respectively.
Drawn wire imports to the US also dipped in August, but not as much as wire rod. According to SIMA license data, total drawn wire imports totaled 41,091 mt in August, compared to 46,030 mt in July. Mexico remained the top supplier of imported drawn wire with 12,378 mt, followed by Canada with 9,328 mt and China with 8,949 mt.
Export wire data, which is only available through June so far, show a steadily rising trend for wire rod, while drawn wire exports dropped slightly month-on-month. According to data from the US Department of Commerce, the US exported 18,356 mt of wire rod in June, mostly to Canada (15,931 mt), an increase from 14,986 mt in May and 13,226 mt in April. Drawn wire exports from the US totaled 15,996 mt in June, a minor decrease from the May total of 16,248 mt and April's total of 16,288. As with wire rod, Canada remained the top destination for US-exported drawn wire in June (with 5,963 mt), followed by Mexico (3,492 mt) and Brazil (1,604 mt).