A perpetually-weak US construction market continues to put pressure on wire mesh prices, while strong automotive and manufacturing activity keeps high carbon prices intact.
According to most economic indicators, there does not seem to be a significant recovery for the US construction market in the cards anytime soon. Despite September rating slightly higher in terms of demand for some wire mesh producers, overall construction employment "continues to be stuck in a pattern where there are just as many hot spots as there are slow spots," according to Associated General Contractors of America chief economist Ken Simonson. As such, wire mesh prices have caved under the pressure of a weak market--in the Midwest, 10 gauge wire mesh rolls are now priced at $69-$71/roll, approximately $1/roll less than in late August.
The drop in wire mesh prices is a result of weak spot prices in the US low carbon wire rod market, as the current range of $36.75-$37.75 cwt. ($810-$832/mt or $735-$755/nt) ex-Midwest mill has been plagued with reports of deals being cut by $0.25 cwt. ($5.50/mt or $5/nt) or more, even for orders that are not considered large. Nevertheless, US wire rod mills have been able to hold on, for the most part, to the current range through months of neutral scrap pricing, and with predictions of yet another sideways move for shredded next month, wire mesh producers tell SteelOrbis that mesh prices will likely level out as well.
As for high carbon wire, demand remains steady due to an active automotive and manufacturing sector. Total US vehicle production in August reached 821,000 units, an increase of 16.2 percent year-on-year, while manufacturing jobs increased in 61 of the US' 100 largest metropolitan areas so far in 2011, according to a recent report from the US Bureau of Labor Statistics. Combined with neutral raw material costs, high carbon wire prices have therefore not fluctuated much in the last month, with US domestic prices for grade 1065 wire remaining in the range of $40.00-$42.00 cwt. ($882-$926/mt or $800-$840/nt) ex-mill and grade 1085 still approximately $44.25-$46.25 cwt. ($976-$1,020/mt or $885-$925/nt) ex-mill.
Import activity for wire rod, on the other hand, has remained slow in the last month, at least for low carbon wire rod--buyers are reluctant to order for shipments a few months down the line when the difference between import and domestic prices is negligible. Current import offers from both Turkey and Spain are between $37.50-$38.50 cwt. ($827-$849/mt or $750-$770/nt) DDP loaded truck in US Gulf ports, only $0.75 cwt. ($16/mt or $15/nt) less than US domestic offerings.