While there is no guarantee that US domestic rebar prices have bottomed out yet, sentiment among buyers is that domestic rebar prices will remain stable throughout the summer as no major ups and downs are expected in scrap prices.
As we reported last week, Nucor will keep rebar prices stable in July, with offers continuing to range from $31.90 cwt. to $32.40 cwt. ($703 /mt to $714 /mt or $638 /nt to $648 /nt) FOB mill.
Still, US market demand for rebar is relatively weak overall, leaving some more room for prices to fall slightly. If business doesn't start to pick up soon, Nucor and other domestic producers will have a hard time filling their order books and maintaining their prices. Therefore, the pricing trend for domestic rebar is still slightly down in the mid-term, though no major price depreciation is expected.
Helping the domestic rebar market, however, is the lack of import quantities arriving in the US. The year 2006 was a record import year, while 2007 has all the appearances of becoming one of the worse rebar import years so far. Certain markets such as the Northeast and Midwest will not even see close to the usual import quantities they have been seeing in past years. This fact keeps domestic mills relatively busy and reduces the possibility of major price decay.
Import prices are still trending slightly down since demand is slow, and shipments that are arriving in June and July reportedly still hold unsold inventories. However, most buyers were extremely careful not to buy too many imports in the last several months and inventories on the ground are currently slim. Buyers are shopping for spot orders and most are aiming to get prices at about $30.00 cwt. ($728 /mt or $660 /nt) in the Gulf region. Future buying activity was very slow for many months, but the spot buying activity could be the first signs of a market turnaround. Since summer arrivals from import sources have a higher cost than the above price and if traders are able to sell their positions, the market can experience a quick rebound.
For the time being, most import rebar offers on the market still range from $30.25 cwt. to $31.25 cwt. ($667 /mt to $689 /mt or $605 /nt to $625 /nt) FOB loaded truck, in US Gulf ports.