NEW YORK Wire
rod market participants doubt that Gerdau Long Steel North
America, Keystone Steel & Wire Co. and Nucor Corp. will be
able to pass along recent price increases to domestic consumers
due to lackluster demand, plentiful supply and competition from
cheaper imports from China, wire rod market sources told
Nucor raised transaction prices on all wire rod products by $23
per ton ($1.15 per hundredweight) effective with shipments Feb.
1, the company said in a Jan. 15 letter to customers (
amm.com, Jan. 16).
increased wire rod by $23 per ton effective with shipments Feb.
1, the company said in a Jan. 16 letter to customers (
amm.com, Jan. 21), while Tampa, Fla.-based Gerdau
lifted wire rod products by $25 per ton ($1.25 per cwt)
effective the same date, the company said in a Jan. 17 letter
to customers (
amm.com, Jan. 17).
"The mills have raised
prices because they can. Ive spoken to several people in
the market who have said that they will not pay the increase.
There is a lot of steel available. Its not like business
is robust. People are buying wire rod on a hand-to-mouth
basis," a source at a Midwest wire rod distributor said. "The
market is unlikely to pay the increase. A mill announcement and
a mill increase are two different things. Its not demand
driven. With domestic stock and imports coming in from China, I
have enough material to last for several months."
Wire rod market
sources told AMM that domestic demand for wire rod is
weak and mills cannot justify raising prices.
"Perhaps people who
buy small tonnages on a month-to-month basis will pay some of
the increase. I dont think they will get the full
increase with the larger buyers. Everything is slow," a Midwest
buyer said. "There is not enough strength in the market to
sustain an increase. If the demand was there coupled with
higher scrap prices, then they could do it, but demand is slow
and it looks like scrap prices are softening."
Snow and Arctic
temperatures this winter have stopped construction, which has
slowed buying and kept demand for wire rod depressed, market
"They may be able to
push through $10 per ton. They will get nothing from some
people. The buyers who purchase large volumes will be able to
negotiate a good price since its a buyers market,"
an East Coast buyer said. "If they get it, it is dependent on
the size of the customer. There is an imbalance between supply
and demand. Inventory levels are stable, and they have been for
the last couple of months."
Domestic wire rod
producers have been competing with lower-priced imports from
China, which has made it challenging for mills to pass on
increases to domestic buyers, sources said.
Several wire rod
buyers polled by AMM said they buy a mixture of
domestic and cheaper imported wire rod from China to balance
Gerdau Long Steel NA,
Keystone and Nucor declined to comment when contacted by