A somber mood still prevails among US wire and mesh producers, as market conditions are anything but rosy.
On the wire side of the market, import numbers are rising as China's VAT rebate cutback from 13 to five percent for wire products is keeping Chinese wire offers from being too ridiculously low. In fact, buyers say that Chinese offering prices have gone up by as much as 20 percent since the rebate reduction took place. Fortunately for domestic wire makers, it seems that the cheap Chinese imports which had invaded the domestic market for so long may be a thing of the past. Another wire buyer reported that South American wire prices also went up significantly, perhaps as a function of the weak US dollar.
Rod prices have been going up both domestically and import-wise; however, there have been no increases announced from wire drawers. Wire drawers tell SteelOrbis that wire demand is painfully slow, and business is off by as much as 30 percent this year.
Some of the larger wire drawers may ultimately find the courage to pass on the increases from the rod mills, but the smaller drawers say that they do not want to alienate their downstream customers as they must remain competitive and in "survival mode" during these slow times. In the long run, the higher import prices for both rods and wire should eventually help domestic prices to rise again once demand improves.
For now, domestic wire business remains very slow and will likely continue to soften for the duration of the year as we approach the holiday season.
On the mesh side, business is down, year-on-year, and there is a great deal of competition going on between the major mesh makers as they fight over the small amount of business that is available.
Some producers are reportedly considering switching production from 10-gauge mesh to 6-gauge mesh and heavier as the 10-gauge market (typically used in residential construction) is particularly soft due to the slumping housing sector.
Also, with wire rod prices now increasing and mesh demand staying flat, mesh producers' margins are going to be squeezed even further, making it increasingly difficult for them to make a profit.
The average market price for a roll of 10-gauge mesh is now at approximately $49 to $51, a decrease of $1 in the past two months. Mesh makers are very disappointed with these prices, with one mesh producer telling SteelOrbis that with the price increases from his rod suppliers, mesh prices should be at around $55 per roll.
In other mesh news, Nucor recently purchased wire mesh fabricator, Nelson Steel Inc. This move has many speculating that Nucor may be able to bring some much-needed pricing discipline to the notoriously unstable mesh industry. At the same time, this move makes some mesh makers nervous, as Nucor is likely to continue their downstream acquisition streak, becoming an increasingly formidable manufacturer that is hard to compete with.