We have seen several more increases since early April, bringing our wire costs up 35% higher than they were at the beginning of 2018. Another increase is said to be coming in July.
There are many factors affecting wire costs and availability, most of which will push prices upward.
On the aggravating side, tariffs have been placed on our trade allies:
- The EU, Canada, and Mexico were temporarily exempted from the tariff implemented by President Trump in March of 2018. At 12 AM on June 1st, the exemption expired and the tariff was applied to those ally countries. President Trump had previously held off on applying the tariffs to our close trade allies “while the United States pursued negotiations to address the administration’s concerns about the state of domestic steel and aluminum production” (money.cnn.com).
- Companies previously purchasing from Mexico and Canada have been forced to buy domestically in order to avoid large cost increases.
- Due to increased demand on domestic sources, lead times for new wire orders have more than doubled.
- In order for wire mills to secure rod from rod mills, they must accept the prices the market imposes.
- Shortages and allocations may become a reality very soon.
In the trucking industry, driver shortages and rising freight costs also threaten to increase prices:
- There is a shortage of drivers, and new drivers are hard to find while unemployment stands at an 18-year low. Some companies are trying to remedy this problem by raising wages.
- The December 18th mandate for e-logging devices, as mentioned in our March 5th release, has not only been costly to implement – it requires drivers to stick to an 11-hour drive time regulation.
- Average diesel prices have climbed to the highest they have been since December 2014.
On a more positive note, a new wire mill may increase the domestic wire supply and ease the strain on existing mills:
- London-based Liberty House Group purchased the mill in December and plan to reopen after training new employees
- They should be producing high carbon wire, which we use, by the 4th
Scrap prices are also down:
- Scrap prices are down about 14% from the beginning of 2018.
- Steel scrap prices can be a good indication of how wire rod prices will shift.
Please let us know your forecasted needs now so we can order as much wire as we can ahead of time to delay when these price increases affect our customers. We will keep you updated as the situation develops.