March Scrap / Rebar Comments
The Chicago Shredded Scrap finally posted down $20/ton from the prior month at $388/ton ending a long month of uncertainty and severe shifts in overall market sentiment. At one point in the last month, it looked as if scrap would “fall off the cliff” as mills were buying virtually nothing and demand in the market was non-existent. Then without notice, in the last week, the market reversed course stabilized and in several areas and grades even improved to reach where it finally settled. Much like the month prior, while there was not much demand for scrap, there also was no much supply due to the frigid winter causing collection problems.
The decline in scrap the last 2 months is putting pressure on domestic mills for price relief on rebar. The mills have not yet caved to the pressure pointing to an extremely solid construction forecast for the spring season with improving weather and demand. Relatively low priced imports can be found in the market further hurting mills ability to raise prices in the near term, however the looming trade case deadline in April could severely impact the supply of imports. If the petitioners are successful in levying a duty, watch for import prices to increase dramatically. If unsuccessful, the mills will need to address the gap between import and domestic steel. The anticipated surge of import to “beat” the April 18th deadline does not appear as dramatic as originally anticipated as few volumes have been recently booked. Lagging sales in the last 6 weeks with the season and weather coupled with pricing that offers no new advantages have soured most big buyers appetites and nothing has been concluded. It is getting to the point that the window is closing to bring in additional product from named sources and beat the deadline.
Sales Merchant at Adelphia Metals