Although there is still a chance that US domestic rebar prices could increase in September, there are more and more indications that the market is close to running out of steam.
End-use demand for rebar in the US remains weak, especially as we get deeper into the "summer doldrums." Not only in the US are things slowing down, but many foreign markets which had been strong for quite some time, like Europe and Asia, are also starting to soften. The falling world prices have not resulted in any cheap import offers to the US yet, but the US will definitely be affected if the upward momentum in the world longs markets has really come to a halt.
On the domestic side of the rebar market, in addition to the soft demand, shredded scrap prices are expected to fall by $20 to $30 /long ton in August. However, due to the continued lack of import offers, and with the available import offers still being mostly higher than the domestic numbers, domestic mills should, at the very least, be able to maintain their rebar prices for another month, and at most, raise their prices slightly, if scrap prices show a lower than expected decline.
For now, domestic prices continue to range from $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. There are extras on #4, #5 and #6, though extras on those sizes are not as high as on #3s.
Mexican mills, which had been raising their prices for the US continuously for the past several months, are starting to reflect the weakening US demand by softening their prices somewhat. Though mills were originally shooting for $55.00 cwt. to $56.00 cwt. delivered to the Gulf, they did not have many takers at that range and have since softened their prices to a range of $53.00 cwt. to $55.00 cwt. ($1,168 /mt to $1,213 /mt or $1,060 /nt to $1,100 /nt) delivered to the Gulf. There are still not a lot of tons available, however. Nevertheless, deliveries are almost immediate from Mexico, indicating that mills have built some floor stock recently.
Traders are still offering mostly at a range of approximately $52.00 cwt. to $54.00 cwt. ($1,146 /mt to $1,191 /mt or $1,040 /nt to $1,080 /nt) FOB loaded truck, in US Gulf ports, with larger sizes (#4s and larger) trending towards the lower end of this range, and #3s at the higher end.
Traders say that there are still not much imports other than Mexican material on the ground, and despite the general softening taking place in the world rebar markets, the pricing trend for imports is still slightly up, due to the lack of material and the higher buying prices abroad. The range they are currently selling at continues to be too low for back-to-back business, so when new import offers are booked (most likely either through Mexico or Japan), they will have to reflect the current asking prices from mills.
The US import rebar market is expected to remain relatively tight in the near future since there are not a lot of shipments in the pipeline, and there are not many unsold positions in transit or at the ports. It will also be a while before the US' main supplier, Turkey, returns to the market. Though the Turkish longs market has shown some signs of slackening recently, prices are still far and above the US market level. Turkish mills were recently asking for numbers at over $70.00 cwt. ($1,543 /mt or $1,400 /nt) FOB loaded truck in the Gulf, and even though they might correct their prices downward now, there is still a huge gap to bridge.
Preliminary Census Data from the US Import Administration show that rebar imports to the US in June totaled 60,723 mt. This total is up from the 51,307 mt imported in May, but down significantly from the 199,914 mt imported in June 2007. In June 2008, the US' main sources for import rebar were: Mexico, at 38,161 mt; Japan, at 16,622 mt; Dominican Republic, at 3,827 mt; United Kingdom, at 1,498 mt; followed distantly by Switzerland, at 314.3 mt.