An announcement from Nucor regarding September rebar pricing is expected by the end of the week, and with shredded scrap prices falling by nearly $60/long ton this month, it is possible that the North American rebar market leader may opt to lower their numbers.
It is not likely that Nucor or other US rebar producers would lower prices by more than $20 /nt ($22 /mt or $1.00 cwt.), since they can always increase their base prices to make up for at least part of the raw materials price increase, and a decrease of a large magnitude might raise a lot of questions about the market's stability. Also, up until recently, the available import competition was priced higher than domestic rebar, so domestic mills have not been losing any business to imports.
For the above reasons, despite the weak demand and falling scrap prices, if Nucor does lower their numbers, it will only by a small amount. There is also a good chance that it will compensate for the entire raw materials price decrease by raising base prices by the same amount, keeping the net rebar price stable.
For now, domestic prices range from approximately $52.25 cwt. to $52.75 cwt. ($1,152 /mt to $1,163 /mt or $1,045 /nt to $1,055 /nt) ex-mill. This price range is an average including the extras the mills are charging for 20-foot rebar. #3s are fetching extras between $3.00 cwt. to $5.00 cwt. depending on region and customer.
Although domestic rebar prices aren't expected to take a huge dip and imports are still not proving to be much competition, the pricing trend for imports is pointing downwards, and it may not be long until import rebar starts to become competitive again. With just about all of the world rebar markets in decline, foreign mills are lowering their prices to gain business. Even Turkish offers may start to look attractive again (though they are not yet). Turkey's main export market, the Persian Gulf region, has turned around quickly and has not been buying lately. Turkish mills had been so focused on the Middle East market, and without serious orders from that market coming in anymore, they are becoming anxious to sell to other markets. All mills are looking to sell some tons to the US market; however, interest from the US is not there either.
Traders and distributors, well aware of the downward price trend, are not booking many new orders since they don't want to get stuck in a down market. They are instead trying to move their current inventories quickly, lowering their prices if need be. Traders' rebar offers for US customers have, on average, decreased by approximately $0.50 cwt. in the last week, with most offers now ranging from $51.50 cwt. to $52.50 cwt. ($1,135 /mt to $1,157 /mt or $1,030 /nt to $1,050 /nt) FOB loaded truck, in US Gulf ports.
Mexican mills are also lowering their numbers, with most offers from Mexico also decreasing by around $0.50 cwt. ($11 /mt or $10 /nt) in the last week. Most Mexican offers now range from approximately $52.00 cwt. to $53.00 cwt. ($1,146 /mt to $1,168 /mt or $1,040 /nt to $1,060 /nt) delivered to Houston.
Though the market is trending down, and it is not yet clear when it will bottom out, one good thing about this market downturn compared to other downturns the US market has seen is that there are not a whole lot of customer inventories this time. Therefore, there is a strong chance that this down market will only be short-lived.