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MANUFACTURING TECHNOLOGY
due to low sales. Likewise, the Middle What are some other positive signs Don’t get too excited, though. It is going
East is still trying to recover from Dubai’s for 2010? Although still at low levels, US to be still a very slow recovery because
fi nancial problems and real estate bust.
housing starts, as well as housing prices, it will take a while for unemployment,
The general atmosphere in this part of the
have started to go up in the last several consumer spending, and home and car sales
world is very pessimistic, and no major
months. This trend will continue but it would to go back to normal and healthy levels. Until
new construction projects are heard to be
planned for the near future.
Fortunately, there are better regions for
consumption out there. The bright spots
are markets like Brazil, Chile and Peru in
South America, and certainly China in Asia.
The wire rod market in China as of late
looks quite stable, on the whole, though it
is likely to face great downward pressure
in the future, as the wire rod inventory in
China’s domestic market is on a rising trend.
As a result of the reduced consumption of
wire rod with the coming of winter, a great
amount of wire rod materials have begun to
fl ow to the south, further contributing to the
increase in market inventory of wire rod in
the southern and eastern China regions. Chart based on SteelOrbis data.
“...strong raw
material pricing,
be unreasonable to expect starts to reach then, there will not be a strong demand, at
coupled with the two million level again before at least least not from the developed world.
improving wire
fi ve years from now. Nevertheless, if we As I mentioned above, strong raw
break the one million unit mark some time material pricing, coupled with improving
demand, will keep
in 2011, it would bring the industry some wire demand, will keep wire rod prices fairly
wire rod prices
much-needed stability and increased capacity steady in 2010. You will see some quick
utilization. Moreover, automotive analysts bushfi res of prices going up and as soon
fairly steady in
actually expect healthy sales and production as more capacity is utilized to benefi t from
levels starting next year, as new fuel-effi cient these higher prices, prices will retreat. I have
2010. You will and electric cars start to enter the market. seen this scenario repeat itself over and
see some quick
And what’s most encouraging is that the over again in the last 15 years that I’ve been
overall domino effect of the global fi nancial involved in the US rod market. It’s always
bushfi res of prices
crisis has been stopped and there is a been “feast or famine.” Many times, I had
going up and as
renewed belief that the US and other major to fi nd rod for customers who were on the
economies are now fi nally recovering. verge of shutting down their drawing plants
soon as more
Wire companies bled a lot of cash because they were running out of material.
in 2009, primarily because they had to Even though it probably doesn’t feel it will
capacity is utilized liquidate high-cost rod inventory, but those ever happen again, the market will continue
to benefi t from
expensive stocks have since been worked to swing back and forth, from having too
through. In fact, US inventories are at much rod to too little. Right now, you want
these higher prices,
an all-time low since the American Wire to jump off a cliff after you talk to a wire
prices will retreat.”
Producers Association started keeping track drawer. But because of low inventories, it
of the inventory data in 2004. The reduced will only take a spark of demand to catch
Regarding the rest of Asia, the smaller production capacities are now slowly the wire drawers off-guard and develop
markets are not doing too badly, and China climbing again. 2010 will be another year, a shortage of inventories again. For this
is able to export some of its capacity to a better one. Demand will improve only reason, I think it would not be unwise
neighboring markets like Thailand, South
modestly, and prices will be steady, on the for wire companies to do some modest
Korea, Vietnam and other countries to satisfy
whole. Companies have adapted to this new restocking for what appears to be a better
demand in those regions.
normal and the worst is clearly over. year in coming.
SteelOrbis provides steel news, sector analysis, trade statistics on steel and prices, as well as a secure
e-trade platform for steel buyers/sellers. Murat Askin is SteelOrbis’ general manager in the Americas
region. Prior to working for SteelOrbis, he had a lengthy commercial career in the North American
wire rod market. He can be contacted at +1 713 589 6049 or via www.steelorbis.com
Fastener + Fixing Magazine • Issue 61 January 2010
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