Scrap / Rebar Update
I was just finishing up below my comments then late last week domestic mills announced a $20/Ton increase on rebar effective June 2nd. The move was not immediately followed by all manufacturers so it is uncertain if it will “stick”. It does, however suggest that mills are bullish on their current pricing in the face of the below mentioned soft import pricing and lagging scrap.
Chicago shredded scrap posted down $15/Ton at $383/Ton from $398/Ton. Several other markets have yet to post but all indications they will be down the same $10-$20/Ton range. This decline was expected as there is currently a surplus of scrap in the yards, demand in the US for scrap is moderate at best and export activity of scrap is very weak at the moment. The trend may continue the next 30-60 days.
Despite this fact, domestic mills remain bullish holding firm on price and in some cases even trying to raise prices in certain regions and customers effective May 1st. These increases have been silent thus far but rumors of a public increase announcement later this month are also around. While shipments from mills are slowly improving with the season and weather conditions, they would need to continue to do so in order for any type of formal industry-wide increase to stick.
On the import front, lack of Mexican imports from the recent trade case announcements will help the domestic demand somewhat especially in those regions hit hardest by rail shipments across the southern border. Turkish imports remain the key driver of the import number which has not moved much as of lately. Turkey has poor demand in most other countries around the world, including their own, and looks to sell their tons in the US. A strong demand in the US this summer will be required to hold that number in check. Even with a solid demand for imports, the pricing gap between imports and domestic is very high relative to recent history.
Sales Merchant at Adelphia Metals
12 May 2014