With US rebar leader Nucor lowering their rebar prices by $30 /nt ($33 /mt or $1.50 cwt.), it is evident that the weak demand has finally caught up with producers. This is the first price decrease of 2008, and it seems to have spooked many rebar buyers in the country.
Although Nucor did not lower prices by the full $59 /nt ($65 /mt or $2.95 cwt.) that raw material prices dropped, the $30 /nt decrease was somewhat sharper than expected. In a strong market, producers could maintain their prices despite the scrap price dip, but with the lack of rebar demand indicated by the weakening order backlogs and falling import rebar prices, US producers felt the need to lower their prices in order to stay competitive.
Taking into account the $30 /nt mid-August price drop, domestic rebar offers now range from approximately $50.75 cwt. to $51.25 cwt. ($1,119 /mt to $1,130 /mt or $1,015 /nt to $1,025 /nt) ex-mill, including the extra for 20-foot rebars.
Looking forward, the pricing trend for domestic rebar remains slightly down since the US' deep economic slump is not showing any sign of abating, and both import rebar prices and US scrap prices are still trending down. Producers may opt to get rid of some extras before they cut base prices again, or they may do both, depending on what scrap prices do next month. One thing is clear though: a market turnaround is not yet in sight.
On the import side, not a lot of positions are coming in, but there are some, from Japan primarily. Rebar traders are selling very little right now, reporting that the buyers are virtually "frozen." No one is buying right now, and everyone is waiting for the bottoming out point. Still, there are very few new shipments coming in, and distributors don't have very large inventories. The overall lack of material in the market should help keep prices from slipping too far before bottoming out.
Traders know that, by cutting their prices deeply, they still will not get many orders right now. Nevertheless, import rebar selling prices, on average decreased by about $1.00 cwt. ($22 /mt or $20 nt) in the last week, with most offers ranging from $50.50 cwt. to $51.50 cwt. ($1,113 /mt to $1,135 /mt or $1,010 /nt to $1,030 /nt). However, even at these lower numbers, there are very few takers. Some distributors are reportedly selling at levels even lower than the above numbers in an attempt to liquidate some inventory.
Mexican offers have also come down by about $1.00 cwt in the last week with most offers now ranging from approximately $51.00 cwt. to $52.00 cwt. ($1,124 /mt to $1,142 /mt or $1,020 /nt to $1,040 /nt) delivered. Mexican mills are reportedly very eager to get orders and will ship to anywhere in the US by rail, eating the freight cost. The reason for this is that, as one trader put it, "Their market is even deader than ours."