Despite domestic mills' assertion that they will keep prices stable for the next month, the lack of orders is continuing to put downward pressure on the US rebar market.
On the domestic side, prices have trended sideways since last week, with most offers still ranging from approximately $27.00 cwt. to $27.50 cwt. ($595 /mt to $606 /mt or $540 /nt to $550 /nt) FOB mill. However, it remains the case that there are some deals booked at below this range, as mills are struggling to fill their order books.
With no improvement for demand in sight, and US scrap prices expected to slide further in March, the pricing trend for US domestic rebar prices is still moving on a downward slope, despite Nucor's announcement earlier this month that it would keep net transaction prices for rebar stable this month. Even if Nucor and other domestic mills officially keep prices stable next month, until demand improves and the market starts to recover, it is likely that domestic mills will continue to offer discounts in order to get business, bringing spot prices slowly downward.
Meanwhile, since last week, import offers from Turkey have also remained stable, at a range of about $23.50 cwt. to $24.50 cwt. ($518 /mt to $540 /mt or $470 /nt to $490 /nt) duty-paid, FOB loaded truck in US Gulf ports. However, the price trend for import rebar is also down, since Turkey's domestic and main export longs markets have all but collapsed, and scrap prices in the region are trending down as well.
Furthermore, long missing from the US market due to the strength of its Yen, Japan has recently re-entered the US import rebar market. Japan is offering at a significant premium to the Turkish offers, but its re-emergence as an import source may indicate that its mills are getting hungrier for business and are testing the waters, so to speak, with plans to lower them if they don't get any bites. As for another one of the US' main import rebar sources, Taiwan is still absent from the market, as mills in the region continue to ride on the coattails of the Chinese market's relative strength.
Mexican rebar offers for the US are still mostly found at the same range as last week, of $24.50 cwt. to $25.50 cwt. ($540 /mt to $562 /mt or $490 /nt to $510 /nt) loaded truck in Houston; however there are some indications that the Mexican rebar market is firming up. Mexican mills are said to be trying to remaining firm on their prices, with some mills even offering at slightly above $25.50 cwt. Then again, prices will likely retreat again if demand doesn't firm up, since the higher-priced offers are already meeting resistance. Additionally, it is telling that many Mexican mills are still willing to deliver orders to US locations as far away as Florida, eating the hefty freight expenses in order to get orders.
Preliminary Census Data from the US Department of Commerce show a significant increase in import rebar tonnage from December to January, although the January total is less than half of that in January 2008. A total of 49,189 mt of rebar was imported by the US in January this year, compared to only 12,448 mt in December 2008. However, the January 2009 total is a far cry from the 115,313 mt imported in the same month of the previous year. By and large, the US' largest import rebar source in January was Mexico, which accounted for 34,213 mt. The next largest sources were: Turkey (9,091 mt), Taiwan (3,442 mt) and Dominican Republic (2,197 mt), followed distantly by the United Kingdom (227 mt). In January of last year, Turkey was the largest source of import rebar, with 58,211 mt.