Start of February- Rebar Market Comments & Scrap Trend
As January came to a close, the rebar market had seemed to cool. It may be the unprecedented cold in certain regions, coupled by the relatively slow part of the season. Or it may be the “numbness” buyers have felt enduring 4 domestic mill price increases in the last 2 ½ months. Whatever the reason, January shipments seemed to be off relative to the rather robust confidence that the market has going into 2014. Domestic mills were seeking their 5th increase, an increase of $20/Ton, going into effect with shipments next week. However, late Friday night, mills started sending out letter rescinding this increase. Mills originally claimed a robust order book would allow them to “catch-up” with recent scrap increases. However, buyers are quick to point out that scrap had softened $10-$20 the second half of this month. Scrap looks possibly like it may give back the $23/ton it went up last month. That number is expected to finalize this week. The domestic letter that was sent out noted “This change is occurring due to a surge in imports from Turkey, Mexico and other countries.” That is true but also think the current scrap trend also helped make this decision easy for them.
On the import front, a second delay in the trade case filing has allowed another round of imports to be concluded. While the numbers vary by region, they are collectively higher than the November lows that were offered for Jan/Feb arrivals. Despite being higher, they are not up the total $60/ton (in that same time period) that the domestics tried for so the result was a widening gap between import and domestics heading into the spring. This is the main reason noted by the domestic mills for their rescinding the price increase. The threat of the cases and shrinking supply should eventually drive the import number up. A failure to push this latest $20/Ton increase thru on the domestic side will also help narrow the gap.
Sales Merchant at Adelphia Metals