Steel Prices / Market Analyses

Market Analysis for Long Products

US rebar mills hold steady in the face of surging January imports

Although it took quite a long time for US domestic rebar prices to catch up to the announced increase for January shipments, US mills nevertheless increased transaction prices again for February once January scrap prices posted an increase. However, ideas on how much of an increase would be accepted in the market were diverse—even at the mill level. Just hours after Gerdau Long Steel North America announced a $1.50 cwt. ($33/mt or $30/nt) rebar price increase, Nucor—the usual pacesetter for rebar price announcements—undercut its competition by $0.75 cwt. ($17/mt or $15/nt).

Soon after, Nucor made it clear that the move was an intended blow to foreign competition, not domestic; but sources were skeptical of this claim. While it is true that January saw a tremendous surge of arriving rebar imports (tonnage levels were up about 215 percent from December), traders were not necessarily selling positions at deeply discounted prices. Even as US buyers were being quoted US domestic spot prices in the range of $37.50-$38.50 cwt. ($827-$849/mt or $750-$770/nt) ex-mill, traders still sold imported rebar on the ground for just underneath.

Therefore, mills found no problem pushing through the $0.75 cwt. increase (Gerdau quietly retreated from their original price point). In fact, some in the market believed that US mills could’ve gotten away with a $1.50 cwt. ($33/mt or $30/nt) increase. Unfortunately, the opportunity had long passed by the middle of January, when scrap speculation started pointing sideways to slightly down for the coming month. And by the end of January, when predictions pointed solidly downward for February scrap prices, it seemed inevitable that mills would only be able to keep prices level if scrap didn’t decline more than $20/long ton. But early February brought a much sharper decrease, at $25-$30/long ton (depending on region). Nevertheless, sources did not expect mills to drop rebar prices by the full amount, and a minor decrease of closer to $0.75 cwt. (effectively redacting the previous month’s increase) seemed to be the more reasonable option for US rebar mills to take.

 Turkish rebar spot prices firm slightly after consecutive declines

As January came to a close, Turkish mills’ rebar export offers softened by $15-$20/mt to $640-$650/mt FOB on an actual weight basis for February shipments. Meanwhile, traders’ 12 mm rebar prices in the Turkish domestic market declined to TRY 1,195-1,246/mt ($657-$685/mt) plus VAT, depending on the region. After the announcements of rebar prices in Biga, Çanakkale in the range of TRY 1,186-1,203/mt ($652-$661/mt) plus VAT and in Istanbul at TRY 1,199-1,216/mt ($659-$668/mt) plus VAT, domestic Turkish rebar spot prices declined; the most substantial drop was in Turkey’s Marmara region. Following this softening, traders’ rebar prices in Turkey dropped to TRY 1,177-1,186/mt ($647-$652/mt) plus VAT. However, a Turkish mill concluded sales of 35,000 mt of rebar to several buyers and traders at the price range of TRY 1,186-1,195/mt ($652-$657/mt).

Further, local producer Kardemir sold approximately 60,000 mt of rebar at TRY 1,185/mt ($651/mt) plus VAT within hours on one day in January. After these two major rebar sales, the Turkish domestic rebar spot market witnessed increased activity. Although rebar prices did not reflect this revival, the overall transaction volume increased. In the final days of January, 12 mm rebar prices in the Turkish domestic market settled at TRY 1,186-1,195/mt ($652-$657/mt) plus VAT, after a slight increase of about TRY 10/mt ($6/mt).

Domestic UAE rebar prices decline amid sluggish demand

In early January, Turkish mills’ rebar offers to the Egyptian market were between $690-$695/mt CFR, for prompt shipments. However, no transaction was reported at this price range and Turkish rebar mills’ offers to Egypt fell to $680/mt CFR for prompt shipments. However, despite price declines, Egyptian buyers concluded no transactions, as Turkish suppliers’ price levels were still too high.

Meanwhile, stable demand kept local rebar prices in the UAE in the range of AED 2,625-2,650/mt ($715-$722/mt) ex-works on a theoretical weight basis at the start of January. But as the month progressed, rebar prices in the UAE domestic market trended downward. Accordingly, domestic rebar prices in the UAE, which stood at AED 2,625-2,630/mt ($715-$716/mt) ex-works, on a theoretical weight basis in the middle of the month, declined to AED 2,600-2,625/mt ($708-$715/mt) ex-works in the latter half of January. The lower end of this price range reflected mainstream prices in Abu Dhabi, while the upper end reflected market prices in Dubai. With UAE rebar demand slugglish, Turkish mills’ offered rebar to the UAE at $685-$690/mt CFR for February shipments.

Chinese longs market registers conflicting trends in early 2012

In the northern and southern regions of China, rebar and wire rod prices trended lower in early January and the rebar futures 1201 contract at Shanghai Futures Exchange closed on January 9 at RMB 4,185/mt ($662/mt). Activity was quiet throughout January on account of the Spring Festival holiday, but long steel prices firmed in early February, and both rebar and wire prices registered minor increases. On February 6, the rebar futures 1205 contract at Shanghai Futures Exchange closed at RMB 4,331/mt ($687.50/mt), indicating a renewed positive pricing trend.

Nonetheless, long steel market confidence remained fragile in China, with demand still mostly weak. Prices softened in the Northern region although increases were registered in the Eastern and Southern regions. While some traders were hopeful of an improved demand environment in the spring, most were still skeptical, which kept a cap on prices and purchasing activity minimal.

Major Turkish producer opens billet sales

For late January shipments, Turkish mills’ steel billet export offers stood between $630-$635/mt FOB on an actual weight basis. But in mid-January, Turkish producers softened their steel billet export offers by $5/mt to $625-$630/mt FOB on actual weight basis, for shipments in late January and early February, due to lethargic demand and competition from lower offers from the CIS. SteelOrbis learned from market sources that CIS traders offered February production of 3SP-5SP steel billet to the export markets at $605-$615/mt FOB for March shipments. In the meantime, steel billet prices in the Turkish domestic market were at $622-$630/mt ex-works, excluding 18 percent VAT.

Local Turkish producer Kardemir opened its domestic steel billet sales in the last week of December at the price range of $622-$627/mt plus VAT ex-works and Kardemir’s billet sales were still open as of the middle of January. A slowdown of construction projects in Turkey due to winter weather conditions resulted in no improvement in long steel demand, consequently causing sluggish demand for steel billet.

Even so, Turkish mills’ mainstream billet export offers were steady in mid-January in the range of $605-$610/mt FOB on an actual weight basis for February shipments.

In the final week of January, Kardemir opened its sales for S235JR grade (St37) billets of 130 mm x 130 mm x 6-12 m size at $585/mt ex-works, excluding VAT, and also opened its sales for MT III-A grade billets of the same size at approximately $590/mt ex-works, excluding VAT. Compared to the previous price list, the new billet prices reflected a decrease of $37/mt. After selling 50,000 mt, Kardemir closed its billet sales, and according to its new sales terms, Kardemir will sell steel billet with 50 percent to be paid immediately in cash and with 50 percent to be paid in the form of a 45-day post-dated certified check or a company check with warranty letter, with no added interest.

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