Due to rising scrap prices, Turkish rebar mills are slowly increasing their prices, which means higher offers for US buyers. Meanwhile, although US mills are keeping their published prices stable, on balance, domestic rebar spot prices in the US have weakened further due to the special deals that are happening fairly regularly.
So far, the increases on the import side have been rather meek, as the producers do not want to scare off buyers. The main difference from last week is that offers at the lower end of the range are slowly disappearing. However, while foreign mills are inching up their offering prices, it is not clear yet whether they will stick, and traders have yet to raise their prices for US customers.
Most import rebar from Turkey offered in the US still ranges from approximately $24.50 cwt. to $25.50 cwt. ($540 /mt to $562 /mt or $490 /nt to $510 /nt), duty-paid, FOB loaded truck in US Gulf ports. There are some inquiries to south Florida ports; however, due to higher freight rates, offers are on the higher end of the above range. Mexican mills have also caught on to the slight up-trend and have raised their rebar offers for the US by about $1.00 cwt. ($22 /mt or $20 /nt) since last week, with most offers now ranging from $25.50 cwt. to $26.50 cwt. ($562 /mt to $584 /mt or $510 /nt to $530 /nt) loaded truck in Houston.
On the domestic front, as of Wednesday afternoon, US longs leader Nucor had stayed mum so far on whether it would adjust rebar base prices in February, and by how much. However, the company has quietly advised many customers that it will keep prices stable by reducing base prices by the same amount that the raw material surcharge (RMS) will increase, which is $8/nt ($0.40 cwt. or $9 /mt).
Still, while domestic prices will officially remain stable for another month, buyers say that any decent-sized rebar order can be obtained at the level of $27.00 cwt. to $27.50 cwt. ($595 /mt to $606 /mt or $540 /nt to $550 /nt) FOB mill, which represents a decrease of $1.00 cwt. since last week. End-use demand is still quite weak, and domestic mills would rather get some business at lower prices than no business at all. Domestic producers have a tight line to walk, as they don't want to lose market share to cheaper imports, and, at the same time, they do not want to officially lower prices since they need to restore buyer confidence in the market. As a result, quiet deals at lower prices have been struck on a case-by-case basis, which has brought the domestic price to its current level.
With import prices trending slightly upward, however, the domestic pricing trend is now neutral. The market is at or close to the bottom, and unless the foreign mills are unsuccessful in their price increases, or scrap prices plummet, it is unlikely that the domestic price will decrease further in the next couple of weeks. More likely, the import price will slowly rise to meet, or hover just under, the domestic level.
On the customer end, inventories for certain sizes are very low, and many smaller distributors have next to no material in their yard and are relying on small, immediate truck deliveries. It is definitely a buyer's market, but on the bright side, the low inventories in the market will make the rebound quicker and more pronounced once demand shows the first signs of improvement.
With the economic news seemingly getting worse by the day, the one bright spot for the US rebar market is President-elect Obama's proposed economic stimulus plan. Part of this proposed plan will involve massive investment in US infrastructure. Such a plan would give a significant boost to the US steel market, particularly to rebar, as most infrastructure building, such as roadway construction, requires a lot of it. But assuming that the plan goes through by mid-February as expected, many believe that the steel market probably won't start to benefit for at least six to eight months. In the meantime, the US rebar market will be left to its own devices to deal with the continuing soft demand.