Despite lack of export orders on rebar, Turkish mills have continued to inch up their export rebar prices in recent weeks in line with their rising scrap and billet costs. However, with Turkish offers generally exceeding US domestic prices, there is little US interest in these imports.
It remains to be seen whether Turkish rebar's upward price trend of late can be maintained, as Turkish mills, while getting decent bookings for merchant bar and wire rod, are still not very full on rebar, and the Middle East market will undoubtedly slow down during the coming month of Ramadan. Then again, with production slowing during Ramadan as well, there is a chance that prices will rise even higher in the post-Ramadan period.
Import rebar offers for the US from Turkey are still at a range of $26.00 cwt. to $27.00 cwt. ($573 /mt to $595 /mt or $520 /nt to $540 /nt) duty-paid, FOB loaded truck in US Gulf ports.
Meanwhile, Mexican rebar offers for the US have all but dried up, as ArcelorMittal’s production is being affected by a strike, and DeAcero is generally not offering to the US and reports that its production schedule is full. Mexico's domestic rebar demand continues to be slow on the whole, but US distributors tell SteelOrbis they suspect that distributors in Mexico are reacting to the mills' recent price hikes and are starting to stock up again. Earlier this month, Mexican material was being offered to the US at approximately $24.50 cwt. to $25.50 cwt. ($540 /mt to $562 /mt $490 /nt to $510 /nt) delivered to California and Texas. However, these offers do not seem to be available anymore, and when Mexico returns to the US market, the prices could be higher.
Domestically, US rebar prices remain on a stable track following Nucor's announcement last week that it will keep rebar prices flat in September. Most offers continue to range from approximately $25.50 cwt. to $26.00 cwt. ($562 /mt to $573 /mt or $510 /nt to $520 /nt) ex-mill. With raw material costs expected to continue trending sideways to slightly up, and import supply lines continuing to tighten, domestic rebar prices are projected to maintain a stable to slightly upward course going into the fourth quarter.
On the demand side, however, it looks like the recovery process will be long and slow. The Commerce Department said Tuesday that new housing construction in the US fell one percent in July from June, led by a 13 percent decline in apartment building. Housing starts were down 38 percent from July of last year. The National Association of Realtors(NAR) also said this week that US commercial real estate activity in the second quarter slowed to its lowest level in 15 years due to poor demand for office and retail space.
NAR chief economist Lawrence Yun projects that commercial real estate will continue to sag through at least the first quarter of 2010, explaining “The office sector requires job growth to fuel the demand for additional space, the industrial sector needs a rise in production and the retail sector is tied to consumer spending.”
Meanwhile, public construction spending will be helped somewhat by American Recovery and Reinvestment Act (ARRA) construction projects, but it is expected that declining state revenues could counteract the increased demand from the federal stimulus projects until at least 2010.