Domestic mills are taking advantage of the steady scrap situation and quiet import market, successfully holding prices stable for the third consecutive month.
After the monthly US scrap announcements resulted in a slight decrease of shredded scrap ($5/lt), most domestic merchant bar mills are expected to leave their transaction pricing neutral. Although raw material surcharges (RMS) for July shipments haven't been officially announced, some merchant bar customers are reporting that unchanged transaction prices are assured. For example, one East Coast service center was informed of the pricing plans just days ago by their mill's salesman.
Currently, merchant bar listed prices are still in the range of $40.30 cwt. to $45.50 cwt. ($888/mt to $1,003/mt or $806/nt to $910/nt) ex-mill depending on size, shape and thickness, and mills have had no trouble getting their asking prices. Additionally, the three-month-long neutral trend for domestic prices has created an atmosphere of stability that is welcomed by many merchant bar buyers.
Despite the stability in prices, domestic demand for merchant bar is not improving as much as many would like. However, orders to service centers and distributors are nevertheless consistent, reflective of well-performing sectors such as manufacturing. According to the Institute of Supply Management, economic activity in the manufacturing sector expanded in May for the tenth consecutive month. Much of the activity has been attributed to both domestic orders and increasing export demand.
Imports of merchant bar have been quiet lately, with only a few offers heard from overseas. Even though the Turkish merchant bar market has softened considerably, US buyers are unsure of how long the downtrend will last, and are hesitant to purchase so far in advance. Merchant bar offers from Turkey decreased in the previous month, by about $2.00 cwt. ($44/mt or $40/nt), bring pricing into the approximate range of $35.00 cwt. to $37.00 cwt. ($772/mt to $815/mt or $700/nt to $740/nt) FOB load truck at US Gulf ports for small sections and some structural channels and angles according to ASTM A36/A6.
Turkey is not always a consistent source of imported merchant bar to the US, but the total tonnage imported in May was nearly double April levels. According to the latest import data from the US Import Monitoring and Analysis System (SIMA), the US imported 1,506 mt of merchant bar from Turkey in May (license data), compared to only 585.5 mt in April (census data). Tonnage levels for June seem to be on the path to surpassing May levels, with 584.1 mt already imported from Turkey as of the second week of the month, according to SIMA license data.
Other major sources of imported merchant bar to the US in May were Canada (5,076 mt) and Mexico (2,987 mt). Overall, 10,437 mt of merchant bar was imported in May, a 12 percent increase from April levels of 9,195 mt. This data is 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).