US merchant bar products continued to see little demand this past week, and raw material costs fell sharply again Wednesday night, leading to further US merchant bar price decreases.
Nucor Bar Mill Group announced late Wednesday that the raw materials surcharge (RMS) for merchant bars will be $0.00 cwt. as a result of the AMM Consumer Buying Price dropping below the program's $162 /nt ($8.10 cwt. or $179 /nt) baseline, thereby lowering their merchant bar transaction price by $83 /nt ($4.15 cwt. or $91 /mt).
Despite speculation over the past week or so that the scrap market may be close to bottoming out, shredded scrap prices have dropped another $75 /long ton (lt) since last week and are down a total of $120 /lt since Nucor announced its October 13, 2008 RMS of $83 /nt ($4.15 cwt. or $91 /mt). Shredded scrap prices are now $125 /lt. Now that the RMS is at $0, industry professionals are wondering if this is the bottom they have been waiting for.
However, demand is still weak and buyers are only expressing interest if they absolutely need the product. Most buyers know that the bottom is approaching but until someone else makes the first move, they seem content to wait for the market to fully bottom out.
Current domestic merchant bar prices now range from $41.55 cwt. to $49.25 cwt. ($916 /mt to $1,086 /mt or $831 /nt to $985 /nt) ex-mill depending on size, shape, thickness, and region.
The merchant bar price decrease announced this week was less than the decrease for rebars ($9.00 cwt decrease for rebars), which are produced mainly in the same rolling mills. The merchant bar market is not significantly stronger than the rebar market; however, the volume of import offers for merchant bars is fairly negligible.
Still, import merchant bar prices are headed down, perhaps even faster than the domestic numbers. While there has also been no major activity in the last several months, some countries like Turkey have been offering merchant bars more competitively. Scrap and billet prices came down hard in the Turkish market, leaving producers plenty of room to offer low-priced merchant bars. Still, shipping merchant bars with breakbulk ships is difficult due to the lack of vessels in the trading route. As a result, Turkish mills have been containerizing merchant bars and shipping to the US Gulf and West coasts.
Meanwhile, merchant bar prices from Mexico have declined since last week and are expected to continue decreasing over the next couple of weeks along with domestic prices. Merchant bars from Mexico are now in the range of about $41.00 cwt. to $42.00 cwt. ($904 /mt to $926 /mt or $820 /nt to $840 /nt) delivered to California and Texas.