After May's scrap prices were announced, Nucor - the domestic leader in merchant bar production - quickly announced its decision to hold prices stable for June shipments.
Nucor's decision took many by surprise, as market players believed that merchant bar prices would fall at least slightly after the hefty $58 /long ton decrease in shredded scrap prices. However, when the scrap market is so volatile, it is not uncommon to see Nucor keep prices stable to avoid adjusting prices every month following the fluctuations in the scrap market.
Effective with shipments as of June 1, 2007, Nucor's raw material surcharge (RMS) will be $100 /nt ($5.00 cwt. or $110 /mt), a decrease of $58 /nt ($2.90 cwt. or $64 /mt) when compared to May's RMS. Nucor has increased base prices by the same amount, thus keeping transaction prices flat for June shipments.
Currently, merchant bar (e.g. 2 x 2 x ¼ angles) prices range from $33.35 cwt. to $41.05 cwt. ($735 /mt to $905 /mt or $667 /nt to $821 /nt), depending on size, shape, and thickness. These prices may hold firm again for July shipments, as US scrap yards predict stability in scrap pricing for the upcoming summer months.
The overall condition of the US merchant bar market is decent. Service center inventories are at a moderate level, and most of their stock has not devalued since domestic prices have held steady. Demand for structural sizes is stable thanks to the non-residential construction market. However, the market is pretty slow compared to this time last year, and it does not look like it will be picking up any time soon.
As for imports, Turkish merchant bar offerings have softened slightly by $0.50 cwt. ($11 /mt or $10 /nt) since SteelOrbis last reported two weeks ago. After rallying to record highs, billet prices have been decreasing in the Black Sea region. Offers are still on the high side, but Asian merchant bar prices are on the rise, closing the gap between Turkish and Asian prices and making Turkish offers more competitive.
Merchant bar offerings from Turkey are now ranging from $36.50 cwt. to $37.50 cwt. ($805 /mt to $827 /mt or $730 /nt to $750 /nt) FOB loaded-truck, US Gulf ports. Prices still have a slightly downward tendency.
In the last few weeks, Asian billet prices have increased a decent amount, pushing merchant bar prices up in that region. Taiwanese offerings are up $0.50 cwt. since our last report, with offers now in the range of $33.50 cwt. to $34.50 cwt. ($739 /mt to $761 /mt or $670 /nt to $690 /nt) FOB loaded-truck, at Gulf and West coast ports, though they are more dominant on the West Coast.
Chinese offers have increased by $1.00 cwt. since our last report and are now ranging from $35.00 cwt. to $36.50 cwt. ($772 /mt to $805 /mt or $700 /nt to $730 /nt) FOB loaded-truck, at Gulf and West coast ports.
The pricing trend in this region is up as merchant bar prices are expected to increase more to catch up with the rising billet costs.
License data from the US Import Administration shows for April 2007, worldwide light section exports to the US totaled 16,914 mt. The top five exporters were: Canada at 6,143 mt, Japan at 4,017 mt, Mexico at 2,371 mt, China at 1,638 mt, and Brazil at 1,352 mt. Halfway through the month of May, worldwide light section exports to the US total 4,584 mt with Canada leading with 2,016 mt, followed by Mexico with 1,677 mt. The data is for light sections of carbon and alloy steel, U, I, L, T and H shapes of 3" or smaller (does not include rounds, squares, or flats).