October scrap trend dooms US rebar price push
After Nucor and Steel Dynamics, Inc. failed to respond to Gerdau and CMC’s attempt at a $1.00 cwt. ($20/nt or $22/mt) US domestic rebar price increase, many in the market speculated that a lack of solidarity among mills would doom any chances of the increase absorbing into spot prices. Silence from two of the largest long product producers in the US has continued, and combined with a sharp drop in shredded scrap prices this month, sources say the rebar increase attempt is “effectively dead.”
However, lower scrap prices—shredded scrap declined by as much as $40 per ton in October, depending on the region—are not the only reason behind the rebar price increase’s demise. Sources tell SteelOrbis that the “deferring” rebar mills are trying to maintain the margin between domestic and import offer prices. Along with anticipated resistance from customers, sources say an aggressive push for higher prices would encourage an influx of imports that would arrive later in the quarter, when demand is historically lower and customers are in a better position to negotiate.
For now, most spot prices for US domestic rebar are still in the range of $33.25-$34.75 cwt. ($665-$695/nt or $733-$766/mt) ex-mill, unchanged in the last week.
*This was published on SteelOrbis website on October 11, 2017.