NEW YORK Tight competition among concrete reinforcing steel wire mesh producers in Texas and the Southwest is leading to aggressive market tactics, with some producers bypassing their distributors and selling directly to distributors customers, sources told AMM.
"Producers are getting more aggressive. Theyre going directly to the customer themselves and theyre not going through distribution," a source at a wire mesh distributor in Texas said.
Wire mesh prices in the Texas market have slumped in recent months, dropping about $20 per ton depending on the customer, a wire mesh producer source said, creating increasing competition among producers to widen their customer bases.
"People are starting to go down below the level were comfortable with," a wire mesh producer source in Texas said of competing producers. "We dont like those prices. And demand for finished product continues to go down."
A second wire mesh producer source in Texas confirmed he does not sell to certain larger distributors, saying that he cannot to sell to them because they demand lower prices than his company can afford. He added that he prefers to sell further downstream to obtain more comfortable margins.
"We sell to some but not the (distributors that) ask for a lot of attention and a very good price. We are not willing to do that," another wire mesh producer source said.
Distributors that buy steel from wire mesh mills, meanwhile, are increasingly finding their normal customers have been contacted by wire mesh producers.
"Business has definitely gotten tougher. ... Some of the mesh wire manufacturers still want to quote us but some are quoting our customers direct," a wire mesh distributor source in Oklahoma said. "There are certain mills that have a reputation for doing this kind of thing. Shoot, Ive run into a couple of guys this year Ive never even heard of that are mill selling direct to some of my customers."
"Its a pretty ugly business," a wire mesh distributor source in Texas said. "(Two mills in particular) will step on toes pretty regular. ... Its just gotten worse and the distribution channels have really eroded."