The US domestic scrap market is on track to trend upwards for the next two months and import competition is minimal, giving domestic mills a strong stance to boost prices come January.
No announcement has been made yet, but buyers are speculating that domestic merchant bar mills may up prices for January shipments. The US scrap market is trending slightly up with a small increase expected for December and a slightly larger increase expected for January. With stronger months ahead for raw materials, domestic mills may be in a good position to raise prices a notch.
Another factor to consider is the weak import market. Import sales have been slow as is usually the case for this time of year, but this year it seems to be more than a slow holiday season. Import offers have been skyrocketing due to the hefty freight rates and the increasing billet prices in the Eastern hemisphere. The weak US dollar has also been affecting the import market. Traders are offering to US buyers but at such uncompetitive numbers, there are very few takers. This is leaving more room for typical import buyers to purchase domestic material.
Still, steel service center inventories are at historically low levels. Also, rebars, which are produced in the same rolling mills with merchant bars, are showing signs of strengthening. Rebars will be competing for rolling time with merchant bars at these mills, making merchant bar supplies tighter.
Considering all of these factors, the domestic pricing trend for merchant bars is strongly up for January shipments. Currently, however, prices are stable, ranging from $33.85 cwt. to $41.55 cwt. ($735 /mt to $905 /mt or $667 /nt to $821 /nt), depending on size, shape and thickness.
Import offers have been trending up as well. Taiwanese offers have been increasing on a weekly basis due to the high freight rates and rising billet costs, but have remained stable this week. Still, no one is really purchasing Taiwanese merchant bars in large quantities either. Many sizes do not get enough demand to make a mill rolling. SteelOrbis was told that a regular producing mill in Taiwan has turned to offering smaller sizes to get back into the market. Small sizes of flats and angles are the most expensive items domestically.
Offers from Taiwan are ranging from $36.50 cwt. to $37.50 cwt. ($805 /mt to $828 /mt or $730 /nt to $750 /nt) duty paid, ex-dock at West Coast ports, with most items over the domestic prices.
Chinese prices are continually climbing up and mills are not even offering, knowing their prices are off the charts. Prices are well above the domestic price range. Also, rumors are still circulating about the Chinese export tax increase, which if the rumor becomes a reality, China will be pushed even further out of the US market.
The same situation remains in Turkey: high freight rates, lack of ships, and expensive billets. This is making it very hard for Turkish mills to offer the US buyers competitive prices.
Turkish offers are also above the domestic price range with offers now ranging from $38.50 cwt. to $39.50 cwt. ($849 /mt to $871 /mt or $770 /nt to $790 /nt) FOB loaded-truck, US Gulf ports. These offers are for mid-to-late first quarter arrivals, though some are being withdrawn completely due to the lack of ships.