With many domestic mills being fully booked for May shipments and import options remaining scarce, the pricing trend for rebar offers in the US is strongly up.
Asking prices from Turkish mills have risen to approximately $52.00 cwt. ($1,146 /mt or $1,040 /nt) FOB loaded truck in US Gulf ports, but US customers are not yet biting at these offers. Traders and distributors are still selling their tons that were booked at the last price level at a range of $45.00 to $47.00 cwt. ($992 /mt to $1,036 /mt or $900 /nt to $940 /nt) FOB loaded truck, in US Gulf ports, except for number threes, which are in short supply and are selling at several dollars cwt. higher than this level.
With no import offers in the pipeline, once traders' current inventories run out, they may have to bite the bullet and purchase tons at the new asking prices. At this point though, it would be a risky venture to take, as the prices are significantly higher than what customers are currently willing to pay. Import lead times are as long as four to five months, and the market could potentially change drastically by the time the tons arrive.
Aside from Turkey, the US' main import rebar source, there are very few import offers available. Traders say that there were recently some tons booked from Mexico at a price range of $48.00 cwt. to $49.00 cwt. ($1,058 /mt to $1,080 /mt or $960 /nt to $980 /nt) delivered to Texas for June deliveries; however, these offers have already been gobbled up and are no longer available. There have also been some Japanese offers for the West Coast sold at a similar price range, but only a very limited amount of tons.
Meanwhile, domestic mills are fully booked for May in many regions and are in some cases turning away business. Although the US rebar market is not as short on supply as the wire rod market since the US' rebar production capacity is greater than that for wire rods, US rebar customers are still feeling the tightness from the lack of imports, particularly in regions like the Midwest where import penetration is currently very limited. Other regions like the Gulf, East Coast, and, to some extent, the West Coast are not seeing as tight a market as there are still some import rebars on the ground.
It is definitely worth mentioning that despite distributors' hunger for tons, end-use demand for rebar still remains slow due to the state of the residential construction market and the slow economy. To a certain extent, the sluggish end-use demand is balancing out the low supplies and preventing widespread panic about the lack of imports. Still, the general consensus is that the market is tight enough for both import and domestic prices to rise further than the current levels.
Domestically, most offers for May delivery range from $44.70 cwt. to $45.25 cwt. ($985 /mt to $998 /mt or $894 /nt to $905 /nt) ex-mill, and these prices are expected to rise by no less than $2.00 cwt. ($44 /mt or $40 /nt) in June due to the expected scrap price increase in May. Some speculate that market leader Nucor may opt to raise prices even higher than the amount of the scrap price increase, although others say this is unlikely given the slow business that fabricators are seeing.