Where do we see wire pricing and lead times for the end of Q2 and beyond? From all indications and research, we see price and lead time increasing.
During the week of 3/14, steel rod producers implemented a price increase due to escalation in steel shredded scrap which set an all-time record high price in Mar 2022 at $615 USD/long ton. As we all know, fuel costs have increased significantly and zinc costs continue to climb as global zinc inventories fall to low levels due to increased demand. Nuro Steel – Kingman, on 3/15 increased current wire rod transaction prices by $135 per ton and for wire rod diameters below ¼” were subject to an extra $20.00/ton. Wire mills are having to pass this on. Deacero announced an increase of $7.00/cwt to all new PO’s shipped after 4/1. Davis Wire announced a $12.00/cwt increase for all new PO’s received after 3/18. Tree Island Steel will implement a price increase of $145/ton or $7.25/cwt on all bright steel and $175 USD/ton or $8.75/cwt on galvanized products for all shipments after 4/11. It is expected other wire mills will follow suit. On average, this equates to a 6 – 8% cost increase from the previous month. Kiswire and Kiswell, are negotiating wire rod pricing for Music Wire and OTMB/OTCS with POSCO and other steel mills; they expect wire rod to increase by 200 – 300/Mt for 2Q; this would amount to a 12% increase for all new orders in April.
In addition to pricing we are seeing longer lead times as capacity diminishes. Tree Island’s galvanized line is full until June and will not quote until mid-April with the majority of their lead times running 6 – 8 wks. out. Deacero will not quote some materials due to the high cost and/or availability of rod.
By the end of Q2 or June, we could see a 15 – 25% increase in wire pricing, according to Tree Island and Davis Wire.
So what are the causes for all these increases? Most point to the Russian – Ukraine war. Russia is the fifth largest steel producer in the world, and sanctions imposed on the country have reduced the availability of steel supply. Additionally, Russia and Ukraine are both key pig iron producers for North America which is used for EAF steel production. Others blame the consumer and what they are willing to pay (supply and demand) while others point to rising fuel and oil prices as well as rising inflation. China, the world’s largest supplier of steel, recently shut down major steel producing centers due to a surge in Covid-19 cases.
So what does this all mean? Bottom line, if you need the material, you need the material. You have to realize you will be paying more at least in the near future and you will need to pass this cost on to your customer. On average, we see an 8 – 12% increase in wire pricing, beginning the second quarter with predictions of increased pricing upwards of 15 – 25% by the end of the 2nd quarter. Knowing this, we recommend purchasing higher quantities now and holding inventory. Still, because of the Russia-Ukraine conflict uncertainty and related market volatility, it is very difficult to forecast future pricing.