LONDON The U.S. trade case against imports of Chinese wire rod is a potential "game changer" for the domestic market, according to U.S. market participants.
Domestic demand for wire rod remains depressed and buying activity has been slow due to scant demand from the construction sector. Exceptionally cold weather across much of North America this winter led to a collapse in construction activity, which is expected to remain quiet until the weather improves toward the end of March or early April.
U.S. wire rod producers have been competing with lower-priced offers from China for several months, and the U.S. Commerce Department initiated anti-dumping and subsidy investigations on carbon and certain alloy steel wire rod from China (amm.com, Feb. 21) after a coalition of domestic producers filed a trade complaint in late January (amm.com, Jan. 31) alleging dumping margins between 99.32 and 100.25 percent and subsidy rates above de minimis levels.
Market participants are confident that duties will be applied to Chinese wire rod imports due to the large volumes that have arrived on U.S. shores since June and due to its low offer prices, which have made it difficult for U.S. mills to compete.
Nearly 68,000 tonnes of wire rod were expected to arrive in the United States from China in January followed by around 30,000 tonnes in February, according toimport licence data through Feb. 25 from Commerces Enforcement and Compliance division.
"If anti-dumping duties are applied to Chinese wire rod imports it could be a game changer for U.S. mills," a buyer in the South said.
Wire rod offer prices from China have dried up as traders have shied away from the U.S. market due to fears that retroactive duties could be applied to imports (amm.com, Feb. 18).
Market sources are expecting domestic supply of wire rod to get tighter over the next couple of months as some buyers may be forced to replenish stocks of certain wire rod grades and sizes from domestic suppliers as lower-priced offers from China dry up.
"The tighter supply may push mills to increase domestic prices but its still too early to say," a buyer in the Midwest said.
"We are awaiting shipment of Chinese steel that will lower our costs further," a southern buyer said. "We are concerned that the trade case against Chinaand higher Turkish priceswill embolden further domestic increases in a flat to slow market."
Some market sources have been getting offers from major mills in Russia, but the prices are similar to domestic prices. Theyve also received offers from Spanish and Portuguese mills, but no deals have been concluded as their prices are not as competitive as China, AMM was told.
However, some market sources told AMM that it will take several months for the domestic market to absorb the large volumes of wire rod arriving from China, which would make it difficult for mills to raise prices when wire rod stocks are plentiful and demand is sluggish.
AMM was told that Turkey could replace China as a big exporter of wire rod to the U.S. if anti-dumping and countervailing duties are imposed on Chinese wire rod shipments (amm.com, Feb. 25).