Will scrap keep shredding US long product prices?
In the face of weak demand and ever-softening import offers, many have been wondering why US longs mills (including rebar, wire rod, merchant bar and beams) didn’t lower transaction prices lower than they did, which was about half of this month’s shredded scrap price decrease. Are they trying to maintain some control over price volatility? If so, do they really think spot prices won’t drop further?
The first mill to make a price move for the month—Gerdau—came out of the gate ahead of traditional frontrunner Nucor with a meager price decrease. Granted, the announcement was made before scrap prices settled for June, but everyone expected the scrap decrease to be substantial, and Gerdau’s announcement was largely laughed at, especially when Nucor retaliated with a price decrease that amounted to twice as much as Gerdau’s. Not surprisingly, Gerdau quietly “revised” their price decrease a few days later to match Nucor’s.
But many in the industry don’t believe it was enough, and already, rebar distributors and wire product producers are reporting the potential for deals underneath the new spot ranges. Merchant bar distributors, meanwhile, have indicated that the price decrease did nothing to “clean up” discounting already prevalent in the market. With so much of a cushion between the actual scrap decrease and long products’ price decreases, industry insiders are certain that mills will end up becoming a little more amenable to negotiating, especially considering the soft import market and domestic demand that is lackluster at best.