The
US steel industry is experiencing a fourth quarter slowdown, and the market for merchant bars is backing the trend.
The
merchant bar market is also starting to show signs of weakening.
US steel service centers have sufficient inventories at this time, meaning that the mills are less busy. Residential
construction has taken a dive, and the current approach of the winter months will cause an even greater slowdown. Demand at this time is decent, but not robust
The shredded
scrap market has been weakening, with prices dropping approximately $30 per long ton this month. In line with the softening
scrap market, the weakness of the
US merchant bar market was shown by
Nucor's $15 /net ton ($0.75 cwt.) decrease in transaction prices last week.
Nucor announced that effective with shipments October 12, 2006, the raw materials surcharge (RMS) would be decreased by $15 /net ton ($0.75 cwt.) and base prices would not be changed, representing a $15 /nt ($0.75 cwt.) decrease in transaction prices throughout November. In the past few months, when the RMS was lowered, the market was strong enough to tolerate an upward adjustment in base prices to keep transaction prices flat. Now, however, the market is not strong enough to accept the higher base prices, hence the decrease.
Current domestic transaction prices for merchant bars now range from $29.60 cwt. to $37.70 cwt. ($681 /mt to $848 /mt or $618 /nt to $769 /nt), depending on size, shape, and thickness.
The import market is feeling the same grief as the domestic
merchant bar market for the most part. Although imports are readily available, there is not a whole lot of buying activity due to
US service centers' inventory reduction programs, less-than-strong demand, and the fact that import numbers are very close to domestic figures.
Billet prices are no longer rising in
Turkey which is becoming less of a factor in the
US import market. Lately, more supplies have been coming in from
China and
Brazil. Both countries are expected to become major exporters of small sections and large structurals to the
US in the future. Chinese mills are becoming more equipped to produce merchant bars of ASTM standard, and with time, they are likely to flood the
US with their products.
As regards the Turkish merchant bars coming in to the
US now, offers have remained the same since our last report, still ranging from $32.00 cwt. to $33.00 cwt. ($705 /mt to $728 /mt or $640 /nt to $660 /nt) FOB loaded-truck,
US Gulf ports.
Taiwanese
merchant bar offers have also remained the same since our last report, still in the range of $30.00 cwt. to $31.00 cwt. ($661 /mt to $683 /mt or $600 /nt to $620 /nt) FOB loaded-truck, at Gulf and West Coast ports.
Licensed data from the United States Import Administration shows for the months of August and September 2006, the top five small sections exporters to the
US were:
Canada at 15,549 mt,
Mexico at 9,266 mt,
Brazil at 5,859 mt,
Turkey at 3,225 mt, and
Japan at 2,996 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).