After dropping $50 /nt in early September, it is still too early to determine what is in store for
merchant bar prices come October. However, the next price announcement for
merchant bar is largely dependent on what shredded
scrap numbers do next month, as
merchant bar demand itself is pretty weak.
Next month’s prices for shredded
scrap are still up in the air -- Some brokers say prices will continue on a down trend, while other sources are seeing an up-tick in buying activity from
Turkey, which could lead to higher numbers.
Scrap numbers in early October are crucial in determining where
merchant bar prices will fall, especially since demand for
merchant bar products is not strong. Thus, the chance of a rising market is only in the cards if
scrap prices trend upward.
Effective with shipments September 10, 2008,
Nucor raised its base prices by $121 /nt ($6.05 cwt. or $133 /mt) for
merchant bar products to offset the $171 /nt ($8.55 cwt. or $189 /mt) decrease in its raw materials surcharge (RMS), resulting in a $50 /nt ($2.50 cwt. or $55 /mt) net drop in transaction prices.
Nucor commented in its pricing release that it has seen a softness in the bar market but expects a rebound in the fourth quarter.
Domestic
merchant bar prices are currently ranging from $49.70 cwt. to $57.40 cwt. ($1,096 /mt to $1,265 /mt or $994 /nt to $1,148 /nt) depending on size, shape, and thickness.
This last price decrease was only the second of the year. In the months prior, mills announced a wave of increases:
merchant bar prices increased by $25 /nt for January shipments, $60 /nt for February, remained stable for March, increased by $25 for April, rose $147 /nt for May shipments, $40 /nt for June, $35 /nt for July, and $65 /nt for August 1 shipments. Prices then dropped by $30 /nt in mid-August, and by another $50 /nt as of September 10, 2008. Prices are still significantly up when compared to January 2008, despite the recent decreases.
Going forward, at least in the immediate future, neither an up-tick in demand or a price increase are expected; however, if
scrap prices remain relatively stable, some stability in
merchant bar pricing is quite possible, especially since imports of merchant bars are still non-existent.
Although prices have been decreasing on a global scale, import offers are still not quite attractive enough to buy just yet, especially with the domestic market cooling down and import shipments not arriving until December or January.