The US rebar market continues to tighten up as distributors struggle to find available tons. Historically a popular destination for imported rebar through the Mississippi barge system, the Midwest is experiencing spot shortages due to the lack of shipments to this region in 2008.
All of the import cargoes that were fixed during the flurry of bookings at the World of Concrete in January have arrived, and hardly any new cargo is slated to arrive in the next couple of months. There is still a decent amount of imported rebar on the ground in the Gulf, but there is hardly any imported rebar to be found in the Midwest, and therefore the already-tight rebar supplies in this region are expected to get even tighter.
As a rebar veteran told SteelOrbis this week, "The problem is, earlier this year no one really booked what they needed. People waited too long and now after these huge increases they're trying to jump back in, but nothing's available."
As per prices, traders are getting better returns on their existing few tons, and spot bookings are now taking place at the range of $45.00 cwt. to $47.00 cwt. ($992 /mt to $1,036 /mt or $900 /nt to $940 /nt) FOB loaded truck in US Gulf ports, representing an increase of $2.00 cwt. ($44 /mt or $40 /nt) in the last week. With the recent domestic price increases and the lack of new imports coming in, the pricing trend for these spot offers is still strongly up.
Back-to-back offers from Turkish mills are still at over $50.00 cwt. ($1,102 /mt or $1,000 /nt) FOB loaded truck in the Gulf, and traders are still hesitant to purchase at that level, especially when Turkish mill prices have stopped rising in the last few weeks. At the same time, there have been virtually no other import sources offering at any quantities except for Mexico, which has been offering at slightly below the Turkish level; however, Mexican mills are already booked through the beginning of July. On the West Coast things are just as tight, with only scattered Japanese and South Korean offers that are higher than the domestic prices. Taiwan has a temporary ban on rebar exports, and so no offers are being discussed from Taiwan.
Meanwhile, things are tightening on the domestic side too, with rumors flying about domestic mills putting customers on allocation. With everyone turning to the domestic mills now, domestic mills are booking up very fast since the May price increase was announced. After the $147 /nt ($162 /mt or $7.35 cwt.) price increase for May shipments, domestic prices range from $44.70 cwt. to $45.25 cwt. ($985 /mt to $998 /mt or $894 /nt to $905 /nt) FOB mill for May deliveries. These numbers are expected to trend up in June as well, not only due to the modest scrap price increase expected to take place this month, but also due to the lack of supply in the market. Though end-use demand for rebar is still flat, as long as the imports remain so scarce, domestic mills will be able to name their price.
Traders confirm that although the market conditions are seemingly ripe for exporting activity, given the weak dollar and stronger demand from foreign markets, domestic mills are not exporting right now since domestic demand is keeping them quite busy for the time being.