Hurricane Ike puts US Gulf rebar market on hold

Wednesday, 17 September 2008 15:55:24 (GMT+3)   |  
       

US rebar prices continued to trend down this week, and the aftermath of Hurricane Ike is expected to further depress buying activity in the coming weeks.

Although domestic rebar mills officially lowered their prices by $70 /nt ($77 /mt or $3.50 cwt.) earlier this month, even with this decrease, domestic prices were still higher than import offers. As a result, domestic mills have had to match import prices in some cases to compete for business. With the price matching and special deals that are taking place, the average domestic spot price has fallen by about $1.00 cwt. ($22 /mt or $20 /nt) in the last week according to SteelOrbis' assessment.

Most domestic offers now range from approximately $46.25 cwt. to $46.75 cwt. ($1,020 /mt to $1,031 /mt or $925 /nt to $935 /nt) ex-mill. Smaller sizes still carry significant extras. The pricing trend for domestic rebar is still down due to the faltering demand and weak scrap prices as well as the cheaper import numbers.

In other news, Hurricane Ike has left a lot of destruction in its path, and several mills in Texas underwent temporary outages. However, the impact of Ike will be felt more on the demand side of the equation than on the supply side, with smaller distributors, ports, fabricators and construction companies in the affected areas not expected to be very active in the coming weeks due to flooding and electricity outages. Rebuilding efforts will eventually take place, though storm damage rebuilding is not concrete or rebar-intensive.

On the import side, prices have also weakened further in the last week, with most spot offers now ranging from approximately $44.00 cwt. to $45.00 cwt. ($970 /mt to $992 /mt or $880 /nt to $900 /nt) FOB loaded truck in US Gulf ports, $2.00 cwt. ($44 /mt or $40 /nt) lower than offers last week. The lowest offers are from several Turkish mills that are desperate to fill immediate holes in their backlogs. Mexican offers are also at $44.00 cwt. to $45.00 cwt., delivered to Houston.

The pricing trend for import rebar in the US is still strongly down due to aggressive offers from Turkey and Mexico. Since the US is a big customer for Mexican mills, Mexico may grow even more desperate from the lull in buying activity in the storm aftermath, resulting in even lower offers.


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