High carbon wire and other specialty grades are still in high demand, while sluggish construction-plagued low carbon wire products resist higher prices.
Continuously healthy demand in the US manufacturing sector has kept specialty-grade wire prices up, along with a shortage of imports--namely from Japan. According to the Institute of Supply Management, US manufacturing expanded for the 20th consecutive month in March, especially in sectors such as fabricated metal products, machinery and appliances. As a result, last month's lively uptrend in high carbon wire rod prices has continued--current US domestic offers range from $42.00-$43.00 cwt. ($926-$948/mt or $840-$860/nt) ex-mill, an increase of $2.00 cwt. ($44/mt or $40/nt) since March. Other specialty grades are also enjoying a healthy uptrend, such as PC strand. While the price range of $44.00-$45.00 cwt. ($970-$992/mt or $880-$900/nt) ex-mill has not exactly increased in the last month, most transactions are pegged in the higher end of the range.
Low carbon wire rod, in contrast, is not seeing significant gains in activity, and as reported earlier this week, prices are on the verge of softening. The spot price range for US domestic wire rod is currently $37.50-$38.50 cwt. ($827-$849/mt or $750-$770/nt) ex-Midwest mill, approximately $2.00 cwt. less than "official" mill asking prices. Resistance to the higher end of the range has caused industry insiders to worry about an imminent softening trend.
Of all the downstream products affected by low carbon price trends, welded wire mesh has been hit rather hard. Even though official mill asking prices for wire rod have not increased since February, wire mesh producers are still struggling to pass that increase through. Last month, 10 gauge wire mesh rolls were $73-$74/roll on the East Coast, and about $3-$4/roll less in the Gulf. Mesh producers expected prices to rise, but found resistance instead--current prices are at about the same range, with some orders even coming in slightly below. According to one East Coast mesh producer, volatility in wire rod spot prices are of the utmost concern. Prices that can go up as easily as they can go down make it incredibly difficult to plan purchases; waiting one day or ordering one day early can have a substantial effect on a company's ability to be competitive, the mesh producer said. However, there is still hope on the horizon--many mesh producers report that despite current lackluster construction activity, Q2 has already started out better than Q1.
As for imports, domestic buyers are no more attracted to import offers than last month, especially considering that current import prices are only marginally less than domestic spot prices. Turkish mills raised prices this week, bringing offers into the range of $36.50-$37.50 cwt. ($805-$827/mt or $730-$750/nt) duty paid FOB loaded truck in US Gulf ports, which came as a bit of a surprise. According to one Midwest trader who attended SteelOrbis' IREPAS conference earlier this month, the sentiment regarding international wire rod demand was not exactly positive, so he is not sure why Turkish mills--which were well-represented at the event--would return home and raise prices.
In any event, wire rod imports into the US seem to be slipping. As of April 19, the US had only imported 51,892 mt of wire rod compared to 81,953 mt in March, according to license data from the US Import Monitoring and Analysis System (SIMA). Similarly, imports of drawn wire for April are also lagging behind, with 28,984 mt imported so far in April compared to 50,189 mt imported in March. It remains to be seen if levels will boost in the last week and a half of the month, but for the following few months, a downtrend in imports is expected, considering the low levels of interest in current import offers.
