As announced by Nucor early last week, domestic merchant bar prices will remain flat for November, and it is very unlikely that there will be any upward movement before the new year.
The traditionally weaker months for the steel industry are ahead, so there is much doubt about whether domestic prices will improve in December. November prices will remain at October levels, and it is very likely that prices will remain flat in December as well.
The US shredded scrap market is, more or less, trending sideways. October shredded scrap prices mimicked September prices, which kept Nucor's raw materials surcharge (RMS) and transaction prices stable for November shipments. In the month ahead, scrap insiders are predicting neutrality at best. If scrap prices remain stable for another month, Nucor will follow the trend and keep merchant bar prices steady for the last month of the year. However, if shredded scrap prices fall, there is a possibility that Nucor will lower prices as demand for structurals is just okay.
Demand for all steel products is weaker when compared with a few months ago; however, it is the fourth quarter, and a slowdown is always expected for this time of year. The non-residential and industrial construction markets are still doing relatively well but have grown more sluggish as the year has progressed. The housing market is in a continuous slump, causing the demand for lighter sections to be very weak.
Current domestic merchant bar prices range from $33.85 cwt. to $41.55 cwt. ($735 /mt to $905 /mt or $667 /nt to $821 /nt), depending on size, shape and thickness. Prices are expected to remain in this range at least through the end of the year.
Although there are very few merchant bar imports coming to the US currently, offers are still out there and prices are continually going up. The last shipments of 2007 should be arriving soon, and current offers are for first quarter arrivals. Some deals have been concluded, though the market in general is pretty quiet. Also contributing to the slowdown is the weak US dollar.
Freight rates have been climbing up significantly and, in turn, pushing up traders' offering prices. Current offers from Taiwan have increased by approximately $0.50 cwt. since our report two weeks ago and are now ranging from $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.
Offers from Turkey have increased by $1.00 cwt. since our last report two weeks ago. Again, freight rates are on the rise and there has also been a problem recently with finding ships. Some foreign mills are now turning to container shipments as opposed to the more costly break-bulk shipping methods to the Gulf and West Coasts.
Turkish offers are now ranging from $37.50 cwt. to $38.50 cwt. ($829 /mt to $849 /mt or $750 /nt to $770 /nt) FOB loaded-truck, US Gulf ports.
Structural sizes are still making their way competitively from Brazil to the Gulf, but they are only marketed on a selective basis.