Domestic merchant bar prices are stable in the US for the time being, as prices are flat for the month of November and are expected to remain neutral in December as well.
The last price increase that Nucor issued for merchant bars was for October shipments due to a slight rise in raw materials costs. Before that, the last transaction price increase made by Nucor was for April shipments due to skyrocketing scrap prices, though the company later attempted to counteract the increase by reducing prices the following month.
Currently, the scrap market is on the soft side. Auto bundle prices registered a $20 to $30 /long ton price decrease from last month, and shredded scrap prices may follow them downwards. Despite a possible drop in the raw materials surcharge this month, merchant bar transaction prices are expected to remain stable throughout December. As the year is coming to the end, and the holiday season is just around the corner, sales are not impressive but are considered to be decent for winter standards, perhaps due to the lack of imports.
The first quarter of the New Year may be a little brighter as there has been a sense of optimism in the market. Steel service centers are ridding themselves of their inventories and are looking to buy for January deliveries. With little import competition, domestic mills will find themselves becoming busier to keep up with their customers' demand.
Domestic merchant bar prices throughout November will 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 through the end of the year and may trend slightly upwards as the New Year progresses.
Because of the high freight rates and lack of ships from the Mediterranean Region to the Gulf, more Turkish mills have been turning to container shipments lately instead of the usual break-bulk shipping methods. This method is no less costly, but it allows smaller tonnages to be shipped to ports that are not frequented by break-bulk vessels.
Although freight rates are still very high, billet prices have come down slightly in Turkey, offsetting the cost of freight. Turkish merchant bar offers to the US are now for first quarter arrivals and have remained in the same price range as mentioned in our report two weeks ago. Offers are 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. In addition to high freight rates, availability of ships is also questionable. Many offers are withdrawn due to lack of vessels.
Meanwhile, a big change has taken place in the Taiwanese merchant bar market: The Chinese export tax for billets has raised Asian billet prices significantly in the last two months, affecting all Taiwanese re-rollers of rebar and merchant bars. With higher billet prices and freight rates continuing to rally in record territory, offers from Taiwan have gone up by $2.00 cwt. ($40 /nt or $44 /mt) since our last report two weeks ago, and they are still trending up. Current offers now range from $35.50 cwt. to $36.50 cwt. ($783 /mt to $805 /mt or $710 /nt to $730 /nt) duty paid ex-dock at West Coast ports. The lack of Gulf vessels from Taiwan has halted new imports from Taiwan to Houston and Tampa.
China is also quiet on offering merchant bars, and there are more rumors that the export tax for merchant bars may go up by an additional 5 percent by the end of the year. If this happens, the new export tax for Chinese merchant bars, sections and structurals will be 15 percent.
According to data from the US Import Administration, worldwide light bar export tonnage to the US for September and October totaled 14,300 mt and 11,350 mt respectively. Compared to the same months in 2006, export tonnage to the US this year is down significantly. In September 2006, worldwide export tonnage to the US totaled 23,663 mt and in October totaled 24,979 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).