Despite predictions of another sideways scrap move in October, the possibility that US rebar mills will once again increase prices is gaining traction.
When shredded scrap prices moved sideways earlier this month, and US domestic rebar mills reacted with a $1.00-$1.50 cwt. ($22-$33/mt or $20-$30/nt) increase in prices (depending on length), many in the domestic rebar market were slightly surprised at how easily the increase was absorbed. After all, demand for rebar is not exactly great, and there was not necessarily reason to believe the market would experience a sudden uptrend in Q4. Such conditions did not exactly bolster a non-raw materials related price increase, but there it was, reflecting in spot prices almost immediately. And now, with shredded scrap predictions pegged at yet another neutral trend in October (with some rumblings of a slight, $5/long ton decrease), sources tell SteelOrbis that there's a very good chance US rebar mills will repeat themselves for November pricing.
The general consensus is that US rebar mills will go for another $1.00 cwt. increase, but if not that much, definitely at least $0.50 cwt. ($11/mt or $10/nt). If the lesser increase is implemented, sources say it will likely pass into spot prices without much resistance. If mills go for the full dollar, on the other hand, they will probably not experience the easy success they found this month for October shipments, which pushed US domestic rebar spot prices into the current range of $36.00-$37.00 cwt. ($794-$816/mt or $720-$740/nt) ex-mill, unchanged from last week.
Some of the resistance to another $1.00 cwt. price increase might come from a renewed interest in import offers. While rebar offers from Turkey and Mexico have not changed in the last week, traders tell SteelOrbis that Turkish mills are more inclined to cut deals, due to higher production output than other products produced at the same mills, such as wire rod. Therefore, while no official change has been made to the current Turkish price range of $35.00-$36.00 cwt. ($772-$794/mt or $700-$720/nt) DDP loaded truck in US Gulf ports, US buyers looking to hedge a few months down the line might be able to book deals for a good margin below current (and likely future) US domestic prices.
Mexican rebar offers, on the other hand, will remain firmly in step with US domestic prices, not moving unless they move. Prices are still in the range of $35.00-$36.00 cwt. ($772-$794/mt or $700-$720/nt) DDP loaded truck delivered to US border states, but even if US prices increase for November shipments, Mexican mills will probably wait a week or so before adjusting their prices, just to see if it sticks.