Although inventory destocking has ended and Chinese imports have slowed, US wire product manufacturers are still facing a very tough market.
Demand remains pretty stagnant across the US wire industry, from mesh to drawn wire, but conditions are particularly weak for any products related to construction. On the building mesh side of the market, 10 gauge roll pricing in the Gulf and southeast US has slipped below $50/roll within the last month, with most offers now ranging from about $47 to $48/roll. Even at this level, producers are having a very hard time getting any orders.
Wire rod costs have come down slightly in the last month, but so has demand for wire products, producers say. One Texas mesh producer told SteelOrbis that after experiencing a somewhat promising up-tick in business in August, the market was "horrible" in September and has not really improved since. Generally, the market is expected to trend sideways, at best, for the rest of the year.
US producers have filed trade cases against a number of products containing steel wire from China, including products like PC strand, wire hangers, springs, and several others, and such efforts have provided some relief for domestic wire and wire product producers. But even in the absence of the influx of Chinese imports that has beset the US wire industry in recent years, demand is so slow that most wire drawers are still having to deal with a very harsh business environment and increased competition amongst other domestic producers.
Still, wire companies have gained some relief from this year's import slowdown, and most firms have also finally worked through the high-cost raw materials which had plagued them for the first half of the year. As a result, some companies are at least doing better than they were earlier in the year. Insteel Industries, one of the largest US producers of steel wire reinforcing products for concrete construction applications, this past week reported earnings of $2.8 million for the fourth fiscal quarter of 2009, which compares to a loss of $1.7 million in the third quarter. Although the firm's selling prices decreased 7.9 percent in the most recent quarter compared to the previous quarter, shipments rose 16.4 percent , and the company also cited the positive effects of reduced imports of PC strand and the completion of customer inventory destocking during the quarter. Spreads between selling prices and raw material costs widened while unit conversion costs declined from higher operating volumes.
However, despite the company's improved fiscal Q4 performance, president and CEO H.O. Woltz cautioned that there is still no marked improvement in demand for the company's products, and the same could be said of the US wire market as a whole. Commenting on the outlook for fiscal 2010, Woltz said, "While the upturn in business we have experienced during the third and fourth quarters is encouraging, we do not believe that it constitutes a rebound in actual end-use demand for our products. In fact, we expect that market conditions will remain difficult for the near-term as customers work down backlogs and new project activity stays at depressed levels amid the ongoing uncertainty regarding the timing and magnitude of a sustained economic recovery. We are also moving into what has historically been our seasonally weakest period of the year when construction activity and demand for our products are significantly impacted by weather conditions. The next two quarters could be particularly challenging given that demand is also being adversely affected by cyclical forces."