As expected, US domestic merchant bar prices have soared along with shredded scrap prices this month, with prices up $147 /nt.
To most, it was no surprise when Monday's announcement came through from Nucor Bar Mill Group stating prices were heading up significantly, but to some, there was a moment of shock seeing that not only are merchant bar prices heading up by the full surcharge increase, but the price hike was effective immediately, instead of the following month.
Nucor announced to customers on April 7th that, effective the very next day, the company's raw materials surcharge (RMS) would increase by $147 /nt ($7.35 cwt. or $162 /mt). Base prices didn't budge, making the net effect an increase of $147 /nt ($7.35 cwt. or $162 /mt) for transaction prices. All confirmed orders by the close of business on April 7th are price protected as long as they ship by April 30, 2008.
The company also stated in its announcement to customers that the cost increase is a result of many factors including: weather-influenced scrap collection, flow, processing problems, strikes that are influencing the production at GM and the resulting reduced prime scrap generation, strong global demand, and a weak US dollar.
This most recent increase puts domestic merchant bar prices in the range of $46.70 cwt. to $54.40 cwt. ($1,030 /mt to $1,199 /mt or $934 /nt to $1,088 /nt) depending on size, shape and thickness.
Despite this huge price increase, US domestic prices are still relatively low compared to imported material. Billet prices are exceptionally high on a global scale, causing offshore mills to pay more for raw materials, and in turn charge more for their merchant bar products to make up for the input costs.
The import market in the US is pretty quiet, mainly due to the fact that prices are so high, and so buyers are not interested in purchasing offshore. Also, with other markets eager to purchase the material, foreign mills really aren't offering too much to the US at this time.
Turkish offers are still afloat, though there are no takers. Turkish offers are now in the range of $54.50 cwt. to $55.50 cwt. ($1,202 /mt to $1,224 /mt or $1,090 /nt to $1,110 /nt) FOB loaded-truck, US Gulf ports. This represents an increase of $3.50 cwt. ($77 /mt or $70 /nt) in just two weeks.
Although US buyers are not purchasing Turkish material, there have been reports that Central American and Caribbean countries have been buying Turkish merchant bars, via container shipment.