NEW YORK Wire rod imports from China have surged to more than 244,000 tonnes in the first half of 2013, more than double the volume in the same period last year, replacing Turkey as the largest offshore supplier to the United States, according to U.S. Census Bureau data analyzed by AMM.
Wire rod mills, traders and buyers spoke of a large influx of Chinese material earlier this year, and Chinese rod imports spiked in May and June, triggering alarm among U.S. mills that imports would put pressure on domestic margins (amm.com, May 17).
Census Bureau data analyzed by AMM shows that U.S. imports of Chinese wire rod in the first half of this year exceeded Chinas full-year 2012 total of 219,271 tonnes.
"We are nervous about so many imports coming in and what itll mean for business," a mill source said. "Our margins are getting eroded because of the Chinese. At this point, were helpless. But I think there will be enough blood on the floor to come out with a potential trade action."
Chinese wire rod shipments are difficult to track because much of it arrives at U.S. ports categorized as hot-rolled bar. The Chinese government imposes an export tax on wire rod, sources said, leading Chinese wire rod exporters to put trace amounts of boron in the rod in order to have it categorized as hot-rolled alloyed bar and thus avoid the export tax.
"The market data now lacks clarity," a rod buyer said. "Theres a lot of rod coming in but its still in that bar-type category. Thats going to fuggle up the data."
Chinese wire rod entering the United States categorized as hot-rolled alloyed bar totaled 225,660 tonnes through June, while the Census Bureau registered only 18,576 tonnes of Chinese wire rod imports in the same period. Total wire rod imports, including wire rod categorized as hot-rolled alloyed bar, was 244,236 tonnes, a 157.7-percent jump from 94,786 tonnes in the first six months of last year.
Chinese wire rod shipments into U.S. ports totaled 62,971 tonnes in May, the highest volume since the beginning of 2012, and 60,001 tonnes arrived in June, the second-highest monthly volume.
Rod buyers and wire rod mills said high volumes of imports are expected to continue in the third and fourth quarters, with a large spread between domestic and Chinese prices.
"Weve booked some Chinese steel thats due for October-November delivery thats well under (domestic rod prices) right now," a second rod buyer said.
Price spreads between domestic material and imported material remain as high as $70 to $100 per ton, depending on grade, mill sources, traders and rod buyers said. AMMs f.o.b. domestic mill buying price for mesh-quality rod is $640 per ton, with industrial-quality rod at $650 per ton, while AMMs import prices for low-carbon wire rod c.i.f. Port of Houston are between $540 and $560 per ton.
"Thats a huge concern," a second mill source said. "Domestic mills cant go down that far ... I think if we could narrow that (gap) to $40 (per ton) people would more easily stick to you. Its a lot easier to stick on that than the $70 or $80 (per ton)."