Supplies are continuing to tighten up in the US rebar market, although the lack of upward momentum in the cut-grade scrap market may prevent domestic rebar prices from rising much further this summer.
While industrial scrap prices are expected to keep heading upward in June, the momentum in cut-grade types of scrap, such as shredded, is slowing as summer approaches due to increased scrap collection activity. As a result, shredded scrap prices, on which mini-mills like Nucor base their raw material surcharge, are expected to stay flat in June, or possibly even drop slightly. Due to the low supplies and high import prices in the US rebar market, mills are expected to raise their rebar base prices for July deliveries even if scrap goes down, making for another net increase for July. However, with increasing indications that shredded scrap may head down in June, this increase in rebar prices will likely be more modest than was originally expected.
Currently, US domestic rebar prices range from approximately $46.70 cwt. to $47.25 cwt. ($1,030 /mt to $1,042 /mt or $934 /nt to $945 /nt) ex-mill. With the lack of import rebar arrivals, mills report that they are very busy. Distributors say that they are not getting all the tons from domestic mills, especially smaller-sized bars and 20 footers, which mills are not producing much of. Although end-use demand is not stellar, due to the tightness in supplies, domestic mills should certainly be able to achieve at least a small price increase in July.
As for imports, there are still no negotiations taking place with Turkish mills because their prices are so much higher than the import spot price level in the US. Distributors and traders are still offering tons at a level of $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, and new Turkish offers would have to be sold in the $60s cwt. for traders to make a profit. The only import material arriving this summer is small amounts of Japanese and Mexican tonnage. Rebar offering prices from Mexico continue to rise, and available tonnage is limited. With a recent price increase that significantly exceeded the US domestic price hike, some Mexican mills are now offering at $53.00 cwt. to $54.00 cwt. ($1,168 /mt to $1,191 /mt or $1,060 /nt to $1,080 /nt) delivered to California.
In certain regions like the Gulf Coast, distributors still have a decent amount of tons available, though areas like the West Coast and Midwest are currently tighter due to the lack of imports in those regions, and are therefore seeing higher spot prices than in the Gulf.
Preliminary Census data from the US Import Administration show that in April 2008 the US did see an increase in rebar imports, both from the previous month and from the same month of the previous year, largely due to an increase in imports from Turkey. April rebar imports totaled 143,030 mt, up from 110,462 mt in March and up from 107,048 in April 2007. The top import rebar sources in April 2008 were: Turkey, at 76,378 mt (from 25,855 mt in March); Mexico, at 31,286 mt; Japan at 25,329 mt; Dominican Republic, at 8,061 mt; and Canada, at 1,376 mt. However, despite the increase seen in April, with no deals being made with Turkey for several months, the total import rebar tonnage for this summer is expected to be lower than usual.