US rebar market leader Nucor announced a price increase for June shipments this week, responding not only to the rising costs, but also to the tight market dynamics.
Nucor raised their rebar prices for June shipments by $40 /nt ($44 /mt or $2.00 cwt.) by raising the raw material surcharge (RMS) by $10 /nt ($10.50 /mt or $0.50 cwt.) and raising rebar base prices by $30 /nt ($33 /mt or $1.50 cwt.). Although prices have been rising continuously in recent months due to the skyrocketing raw material costs, it has been a long time since Nucor has raised its rebar base prices. However, with very few import offers available, the market is obviously tight enough for domestic mills to raise prices above and beyond the modest shredded scrap cost hike seen this month.
In fact, given the favorable market conditions for the domestic producers, Nucor could have hiked their prices even higher than $40 /nt for June. Instead, they exercised restraint, raising their numbers by the lowest amount that would make sense, perhaps being wary of coming too close to the import prices.
Taking into account the $40 /nt domestic price increase, most domestic rebar offers now range from approximately $46.70 cwt. to $47.25 cwt. ($1,030 /mt to $1,042 /mt or $934 /nt to $945 /nt) or ex-mill for June shipments. The pricing trend for domestic rebar is still up, as both raw material costs and import prices are expected to continue trending upward in June. Domestic mills report that they are very busy and expect to be full through the end of summer.
Also giving the domestic market strength is the relative absence of imports. Besides some scattered tons coming from Mexico and Japan, traders say that there have been virtually no new rebar orders booked since the end of January, meaning there will be no imports arriving from now until the end of summer. Areas where there has been no import penetration in recent months, like the Midwest, are especially short on supplies, and things are tightening up on the West Coast as well with Taiwan now out of the market. Turkey is still offering, but their new offers are, at close to $60 cwt. ($1,323 /mt or $1,200 /nt) FOB loaded truck in US Gulf ports, far too high-priced to gain any US interest.
License data from the US Import Administration show that although rebar imports from Turkey registered at an impressive 95,436 mt in April, this month as of May 13 there have not been any import rebars arriving from Turkey. Turkish rebar imports will continue to be insignificant in June and July since even orders placed now will not arrive for several months. License data show that the other significant import rebar sources for the US in April included Mexico, at 37,319 mt and Japan, at 28,391 mt, followed by the Dominican Republic, 8,556 mt, and Canada, 1,414 mt.
With domestic mills raising their numbers and tonnage on the ground continuing to tighten up as the existing import inventories are sold, traders and distributors are expected to raise their prices accordingly. Currently, most import rebar spot offers range from approximately $48.00 cwt. to $49.00 cwt. ($1,058 /mt to $1,080 /mt or $960 /nt to $980 /nt) FOB loaded truck, in US Gulf ports.