Long products in general, and wire rod and concrete reinforcing bars in particular, were among the first steel products that made the switch from fully-integrated steel mills to the fledgling mini mill concept of the 1970's.
Looking at the American wire rod industry now, it is hard to imagine that US Steel, Bethlehem Steel and LTV Corp. once dominated the wire rod market. All of their plants disappeared a long time ago. US Steel's rod plant in Pittsburgh, California was dismantled and sold to China during that country's serious start-up phase into the steel industry, and the rod plant of Bethlehem Steel in Sparrows Point, MD disappeared along with a large chunk of that formerly huge integrated mill. Their remaining and more lucrative flat rolled segment is today part of Arcelor Mittal. In fact, in the recent past, some traders used the ship terminal of that plant to unload imported wire rods, giving the situation an ironic twist.
One of the visionaries promoting the mini mill concept, Willy Korff of Germany, built two mini mills in the US, strategically located close to seaports. These two locations were in Georgetown, SC and Beaumont, TX. Both mills used direct reduced iron from an in-house supplier and were thus able to broaden their product range beyond the very basic low carbon grades of the early mini mill era. Alas, Mr. Korff's empire began to crumble in the early 1980's and he had to sell his two groundbreaking mini mills in the US. The Georgetown plant was acquired by the Kuwaiti government which then sold it to Usinor in France. The mill went into Chapter 11 for a while, severely reduced their cost basis and was scooped up by ISG (International Steel Group) who in turn was taken over by Ispat Intrernational. Eventually, Ispat merged with Arcelor and the Georgetown wire rod (and to a smaller extent rebar) mill ended up with Arcelor Mittal. To this day, it is still a leading supplier of wire rod, covering a range that includes PC strand, welding wire and tire bead qualities. These grades were once almost exclusively the domain of integrated mills.
The Beaumont, TX plant was sold to North Star in Minneapolis, MN who operated the plant successfully for a number of years before selling it to the Brazil-based Gerdau Group. Gerdau also acquired the wire rod plants from Costeel in Perth Amboy, NJ and the Sanderson, FL based wire rod mill from Ameristeel. In fact, today all three Gerdau wire rod plants run under the banner of Gerdau Ameristeel. Gerdau is now the single largest rod producer in the US.
One mini mill, Northwestern Steel in Sterling, IL, was taken over by Leggett & Platt, the largest wire drawer in the US. By all appearances this proved to be a highly successful move. The mill supplies Leggett with over 400,000 metric tons, which is close to half of their needs.
Georgetown briefly owned the old Armco wire rod mill in Kansas City, MO. This mill was disassembled, and the rolling mill now is the backbone for Oklahoma Steel and Wire's in-house rod mill.
Keystone Steel and Wire went through their own changes. After aggressively downstreaming, they have pulled back somewhat from wire drawing operations. Today only two wire plants remain in their fold. Their rods are marketed in the Midwest, Southwest and in Western areas. There they compete with a mini mill in Pueblo, CO which used to be called CF&I before it was sold to Oregon Steel and renamed Rocky Mountain Steel. Their downstream wire plant was sold to Davis Wire, one of the largest wire manufacturers in the US.
Antidumping and countervailing duty suits have played an important role in the wire rod mills' history. They encountered a formidable "adversary" in the American Wire Producers' Association. Based on their lobbying, two dumping suits were rejected by the International Trade Commission in the past fifteen years. But twice the dumping suits went through all the way, resulting in the institution of huge penalties. To this day, former large suppliers of wire rods, Moldova and Ukraine, are shut out of the US market. Other countries such as Canada and Mexico were able to bring down their penalties to relatively minor margins through the review process. Brazil is shut out of the low carbon market but exports rods in specialty grades not covered by a dumping suit.
Imported wire rods used to play a somewhat minor role in the US, and eyebrows were raised when their share exceeded 25 percent in the early 1990's. Over the years, imported rods increased steadily in volume, taking on an active role in controlling market pricing. During a recent interview, an American rod executive was asked who the dominating player in the US wire rod industry might be who could be the leader in setting prices. His curt answer was "imports." After all, led by a Chinese onslaught, imports had achieved a market share of around sixty percent by the end of last year.
As we are halfway through 2007, the US wire rod market seems to have changed once again. China has significantly cut back its rod exports by introducing an export tax, and Turkish mills seem to be content to supply to other, higher priced markets. The share of imported rods has fallen dramatically, and for the time being, US wire rod mills are in charge of setting the market price. Unfortunately for them, as of the summer of 2007, wire prices have fallen to unexpected lows.
Consequently, the wire rod market looks quite different now than it did only five years ago. But one theme seems to be repeat itself: consolidation. Nucor recently acquired Connecticut Steel. It is a relatively small wire rod mill, but Nucor's entrance into the rod market is significant inasmuch that they have also added two wire mills to their portfolio and are clearly determined to expand their presence in the wire and wire rod field. Nucor, the most successful of all US mini mills, has slowly grown into a steel giant, even exceeding US Steel's capacity. With their entry into the US wire rod and wire industry, the current cycle seems to be coming to a close.