The past week has been an interesting one in the US rebar market -- Domestic rebar leader Nucor lowered their prices significantly, while foreign mills raised theirs.
Last week, Nucor announced that, due to November shredded scrap prices falling below the program baseline for its raw material surcharge mechanism, there would be no additional scrap surcharge for its long products for orders as of November 6. In addition, for the time being, effectively eliminating the RMS, which had been $83 /nt ($91 /mt or $4.15 cwt.), the company decreased base prices by $97 /nt ($107 /mt or $4.85 cwt.). The net effect was a hefty decrease of $180/nt ($198/mt or $9.00 cwt.) for rebar transaction prices.
Taking into account the most recent price decrease, most domestic rebar offers now range from $30.75 cwt. to $31.25 cwt. ($678 /mt to $689 /mt or $615 /mt to $625 /mt ex-mill. However, as scrap prices finally look to be bottoming out, and there are price increases taking place on the import front, the pricing trend for domestic rebar is no longer projected to continue trending down.
Despite the weak demand, US import rebar sources like Turkey and Mexico have raised their rebar offers for the US to reflect the over $100 /mt increase in scrap prices that took place in the last two weeks. In addition, US scrap brokers indicate to SteelOrbis that domestic scrap prices have slightly bounced back as well. However, rebar traders in the US have indicated that there has been little to no interest from customers in the new price levels, and they are still offering to their customers at the same levels as they were last week.
Import offers from Turkey are offered for $27.00 cwt. to $28.00 cwt. ($595 /mt to $617 /mt or $540 /nt to $560 /nt) duty-paid, FOB loaded truck, in US Gulf ports. Offers from Mexican mills, however, have increased by about $1.00 cwt., to a range of $30.00 cwt. to $31.00 cwt. ($661 /mt to $683 /mt or $600 /nt to $620 /nt) at the border.
Although the new price levels from foreign mills have not yet been accepted by US customers due to the lack of demand, the credit crisis and the abysmal economic conditions, the import market does seem to have finally bottomed out. Import prices had finally dropped too low in relation to demand, and now they are correcting back up again. Once buyers need to make purchases again, they will have to pay the higher numbers. While it is not certain that this upward correction will be a lasting trend, the import pricing free-fall has at last ended, and this should make buyers who have been waiting on the sidelines for a while feel comfortable with re-entering the market.