At the joint SteelOrbis and IREPAS conference in Prague this weekend, Carlos Amezcua of Voest-Alpine Intertrading AG provided a focused look at the current situation of the import
rebar market in the US, including information about the major points of entry for
rebar into the US, the major suppliers of
rebar to the US, and the challenges that the market faces in the future.
Mr. Amezcua told the audience that the major points of entry for
rebar into the US in 2005 were: Texas (Houston and Laredo), Florida (Everglades and Tampa), and California (Los Angeles, Long Beach, Oakland, New Orleans, and San Juan,
Puerto Rico. The total amount of
rebar imports to the US in 2005 was 1.162 million metric tons. The figure is expected to reach 2 million mt in 2006.
Sixty percent of the total import
rebar volume arrived in the Gulf region, with an increasing amount of imports coming into the port of Houston. Laredo saw a drop in imported tonnage due to the Sicartsa strike in
Mexico, while the port of New Orleans was of course badly hit by hurricane Katrina, though labor and stevedoring volumes are now back to normal. Very limited tonnages of
rebar are coming to the East Coast ports, which include Baltimore, New Haven, Philadelphia, and Wilmington. One import destination that used to be strong and is now unpopular because of its stagnant economy is
Puerto Rico.
Puerto Rico once received 20 to 25 percent of the total import
rebar volume to the US, but the amount it now receives represents less than ten percent.
Mr. Amezcua presented the audience with statistics that showed that the main supplier of import
rebar to the US is
Turkey, which is the source for over 50 percent of the total incoming tonnage, most arriving at the Gulf ports.
Turkey's role in the US
rebar market has increased dramatically in the last several years.
Taiwan makes up about 13 percent of the market. Some of its products come in through the Gulf, but most arrive at the US West Coast.
Japan is now another major player in the import market, providing approximately 10 percent of total tonnage to the US in 2006.
Mexico makes up about 5 percent of the market.
Looking back to the summer of 2006, Mr. Amezcua told us that 100,000 mt of
rebar, ex-
Turkey, had arrived in the US from July through to September. The arrivals were up to 90 days late. Customers in the US, afraid of cancellations, decided to duplicate orders in case the market would still be hot towards the end of the summer. This helped to increase purchases early in the summer period. However, once all shipments had arrived, the market was saturated with a glut of
rebar. At the Inbesa terminal in Houston, waiting times were up to two weeks, while there was a cost difference of up to $50 /mt to customers. At the present time, there are many cancellations in addition to requests for late arrivals. The most recent completed bookings occurred six to eight weeks ago.
Although the fourth quarter of 2006 will be the slowest of the year, in general 2006 was a very strong year for
rebar, with prices reaching their highest levels ever due to the very strong demand.
Looking ahead, the biggest challenge that
rebar imports face, according to Mr. Amezcua, is the slowing state of the residential
construction market. The market is burdened with high inventories of unsold homes and interest rate hikes, though it is expected that any interest rate reductions will not help now in terms of new home sales, as demand for new houses is 20 to 30 percent less than previous levels. The current level of speculative inventories is the largest ever.
Other factors that will affect the import market are the weak Asian market, and the lack of demand from the US in the last 60 days. Mr. Amezcua predicts that eventually Turkish and other import producers will have to reduce prices in order to move tonnage, as the next contracts are due for December
production.
He predicts that after this inevitable price correction, the market will be healthy in the first quarter of 2007. Import arrivals have now slowed, so inventories will soon return to normal. At this point, most predictions for the market's future are optimistic.
The outcome of the 2007 Sunset Review for antidumping rates, which include
rebar imports from South
Korea,
Latvia,
China,
Moldova and
Ukraine, will also affect the import market in 2007.