North America's long products leader, Nucor, has announced to customers that merchant bar prices are up $25 /nt ($1.25 cwt. or $27.56 /mt) for April shipments.
Following a rise in shredded scrap prices in early March, Nucor upped its April raw materials surcharge (RMS) by $21 /nt ($1.05 cwt. or $23 /mt) to $246 /nt ($12.30 cwt. or $271 /mt). In addition, the company moved base prices for merchant bar products up $4 /nt ($0.20 cwt. or $4.41 /mt). The net effect of this move will push merchant bar transaction prices up $25 /nt ($1.25 cwt. or $27.56 /mt) for April shipments.
For the month of April, domestic merchant bar prices will range from $39.35 cwt. to $47.05 cwt. ($868 /mt to $1,037 /mt or $787 /nt to $941 /nt), depending on size, shape and thickness.
Rising scrap prices were the main reason that Nucor increased prices, but there were other contributing factors as well. Overseas merchant bar prices have been increasing, and domestic prices have remained lower than international levels. This has created a lack of import arrivals to the US, which has been tightening the domestic market's supply. Buyers have not seen any attractive import offers for quite some time, leading service centers to stock mostly domestic material.
Even if offshore prices dropped slightly (which they are not expected to do) the benefits of buying imports right now would still not outweigh the risks. For offerings on the table today, deliveries are pushed out until June. Even though it looks like a remote possibility now, by June domestic numbers could possibly peak or even decline. For the most part, buyers are being very cautious and are only buying what is needed since demand is just mediocre, prices are high, and the market could turn around very quickly.
As for the months to come, it is too early to tell what scrap prices will do in April. Some sources predict a slight downward movement, while most others believe prices haven't finished their upward part of the cycle just yet.
The lack of imports and continuing price rally in every single major world market suggest that US prices have a lot of catching up to do. Therefore, SteelOrbis believes there is a high probability of domestic price increases for May and June shipments.
On the import side of the market, prices are so high that most traders are not even offering to their customers, knowing that unless they come with lower offers, no one will bite. Still, traders are unable to lower their numbers; freight rates are more or less stable, but raw material costs are going up on a global scale, and import mills continue to raise their prices.
There has been mention of a few offerings from Taiwan to the West Coast, though the small amount of material that is trickling in is only arriving by container. Turkey has been offering to the Gulf at high numbers as well, and the prices are going up in big steps, on a weekly basis.
Both scrap prices and billet prices have been climbing in Turkey, causing mills to up merchant bar prices by another $2.00 cwt. ($44 /mt or $40 /nt) in the last two weeks. Turkish offers now range from $47.00 cwt. to $48.00 cwt. ($1,036 /mt to $1,058 /mt or $940 /nt to $960 /nt) FOB loaded-truck, US Gulf ports, though there are little to no takers at this price level.
License data from the US Import Administration show that worldwide light bar exports to the US for February 2008 totaled 11,885 mt with the top three exporters to the US being Canada, with 8,670 mt; Mexico, with 2,035 mt; and Brazil, with 626 mt. The data are 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).