US demand for merchant bar products is weak, and shredded scrap numbers have continued to slide in the last couple weeks, leading buyers to speculate that another price drop is on its way.
Scrap brokers have confirmed with SteelOrbis that shredded scrap prices fell approximately $35 /long ton (lt) in just the first two weeks of September, and since then prices have fallen further. The official scrap numbers for October won't be out until the end of the week, but scrap brokers are saying the final numbers could be as much as $75 /lt down from the beginning of September. As scrap pricing is a large determinate as to what will come for finished steel products, it is a likely possibility that merchant bar prices will decrease again come mid-October.
In addition to falling scrap numbers, merchant bar demand is extremely weak. The US is in the middle of a financial crisis, which has finally affected the steel industry. Demand is soft, prices are down, and a rebound isn't likely in the near future. Although Nucor stated in its mid-September pricing release that a rebound is expected in the fourth quarter, buyers have their doubts as the market has seen some major softening lately.
Domestic merchant bar prices are currently ranging from $49.70 cwt. to $57.40 cwt. ($1,096 /mt to $1,265 /mt or $994 /nt to $1,148 /nt) depending on size, shape, and thickness.
Going forward, at least in the immediate future, neither an up-tick in demand nor a price increase is expected. If scrap prices begin to stabilize after October, some stability in merchant bar pricing is quite possible, especially since imports of merchant bars are still non-existent.
Although prices have been decreasing on a global scale, import offers are still not quite attractive enough to buy just yet, especially with the domestic market cooling down and import shipments not arriving until December or January. Only a few countries are offering to the US and their offers are not priced far enough below the domestic numbers to stir up business.
Data from the US Import Administration show just how much imports have slowed in the last year. When comparing the three-month span of July, August, and September 2007 with the same three-month span of the current year (using July and August Census Data, September License Data), US merchant bar imports fell by approximately 19,531 mt. September in particular was a slow month with tonnage totaling 15,324 mt in 2007 and only 7,268 mt in 2008 (though the Census Data for September 2008 may show a slightly higher number). The data is for light sections of carbon and alloy steel, U, I, L, T and H shapes of 3" or smaller (does not include rounds, squares, or flats). Fourth quarter data are expected to show a similar trend.