US domestic rebar and wire rod markets were steady to down slightly this week as late reports of largely unexpected sideways pricing settles during the August scrap buy cycle may have taken the wind out of recent limited long steel price increases, market insiders told SteelOrbis this week.
This week’s assessment differs from the week of July 29, when a growing number of market insiders reported August scrap prices were likely to rise, causing a bump in some finished steel prices, they said.
While most market insiders agreed rising scrap prices could signal a bottom for finished steel products such as rebar and wire rod, the outlook now remains uncertain as inventories remain plentiful with mills still prepared to offer buyer discounts to those with contracts in hand.
And while recent reports indicated sellers as of late sought $10-$20/ton premiums for August scrap, the combination of bad economic data on jobs, high interest rates and the recent stock market declines with little change in any real market fundamentals, seems to indicate a new market bottom for finished steel products may be at hand.
“I have not heard anything new on August scrap as of late, but Nucor dropping the price of merchant bar by $40/ton is telling,” said one East Coast rebar market insider.” All the other mills followed merchant bar and structural steel down $40 per ton effective immediately. That happened last week, so Nucor must have seen (lower prices) coming.”
Following a slight price increase during the week of July 29, US domestic rebar is now discussed at $37.50/cwt. FOB mill ($750/nt or $827/mt), versus $38.00/cwt. ($760/nt or $838/mt) a week ago.
In the domestic wire rod market, prices declined $0.50/cwt to $38.00/cwt. ($760/nt or $838/mt) FOB mill, versus previous assessments at $38.50/cwt. ($849/mt or $770/nt) seven days ago. Wire rod mesh ex-mill US was steady at $57.50/cwt. ($1,150/nt or $1,268/mt), rebar dealers said.
“Most customers are continuing to be okay, with the market mostly stabilized and many returning from vacations,” said one Mexican rebar market insider. “Margins are continuing to be tight, and lead times (for rebar) are better at between 30 and 60 days.”
In other markets, US Gulf Coast loaded truck rebar is discussed steady at $36.50/cwt. ($730/nt or $805/mt), while US East Coast rebar fell $0.50/cwt. or $10/nt to $36.50/cwt. ($730/nt or $805/mt), rebar traders said.
Speculation remains high that the Fed will reduce interest rates in September ahead of the national presidential election, which could spur spending in the construction industry. High interest rates, market insiders claim, has limited demand growth within the US construction industry and resulting demand for structural steel, as current interest rates continue at 23-year highs.