As
Nucor announced this week, it will keep
rebar transaction prices officially stable in May. However, given the continued weak demand, the announcement may have little to no effect on actual
rebar spot prices.
With Chicago shredded
scrap benchmark prices falling to $155/ton, which is $7/ton below
Nucor's Program Baseline for its Raw Materials Surcharge (RMS) applicable to rebars, there is no RMS in effect as of April 9. The RMS that was previously in effect for
rebar was $23/nt. However,
Nucor announced that in conjunction with the $23/nt decrease in the RMS, it is raising base prices by the same amount, resulting in transaction pricing for
rebar remaining unchanged. Nevertheless, even though
Nucor officially kept prices stable, this does not mean that domestic spot prices will not continue to deteriorate.
Due to weak demand, competitive import offers, and downward trending US
scrap prices, domestic mills will likely continue to quietly discount their offers, especially for mill-affiliated fabricators. Currently, most domestic
rebar offers range from $24.00 cwt. to $24.50 cwt. ($529 /mt to $540 /mt or $480 /nt to $490 /nt) FOB mill. The pricing trend for domestic
rebar remains slightly down. At the same time, it is at least a somewhat positive sign that US mills are attempting to stabilize
rebar prices, perhaps indicating they believe the
rebar market is stronger than that for merchant bars and WFB, which they announced net price decreases for this week.
On the import side, although Turkish mills attempted to raise their
rebar prices for the US based on increased
scrap prices in the region and some bookings from
Africa and the
Middle East, there has been no US interest in the new offers, and import spot prices continue to trend down as traders try to liquidate their inventories. Furthermore, the volume of bookings Turkish
longs mills have received from other regions is far from reaching normal levels, so probably sooner rather than later, Turkish mills will need to resume their sales to the US. Most likely, they will have to lower their prices in order to do so.
As of now, new bookings from Turkish mills are virtually non-existent. Meanwhile, traders in the US continue to offer Turkish material at a range of about $21.50 cwt to $22.50 cwt ($474 /mt to $496 /mt or $430 /nt to $450 /nt) duty-paid, FOB loaded truck in US Gulf ports. However, SteelOrbis has heard that in some cases, traders are trying to unload their inventory at $20.00 cwt. ($441 /mt or $400 /nt) or even lower.
Meanwhile, Mexican
rebar offers to the US dropped further since last week, by about $1.00 cwt., and now range from $22.00 cwt. to $23.00 cwt. ($485 /mt to $506 /mt or $440 /nt to $460 /nt) loaded truck in Houston. Mexican imports are expected to mirror the US
rebar market's downward trend as both export and domestic
rebar demand in
Mexico continue to be soft.
While both domestic and import
rebar offers in the US are still trending down, there have been some indications that demand levels are bottoming out. Though demand may not see a resurgence anytime soon, it is likely that it will remain at the current low level rather than continuing to deteriorate. Increased foreign demand for US
scrap exports in recent weeks is one positive sign, as is the leveling off of some key economic indicators.
The national economic outlook has continued to show some slightly positive signs. The US Department of Commerce reported this week an increase of 0.6 percent in sales from US wholesalers in February, which is the first increase in this area since June 2008. Furthermore, the increase in wholesaler sales helped inventories to drop by 1.5 percent, reflecting a level of contraction which has not been seen since 1992. The report also shows a record decrease of 7.9 percent in auto inventories as well as a rise in auto sales of 3.7 percent. While the overall economic picture remains pretty bleak, there are a few bright spots such as these ones that may indicate that the economy is getting closer to bottoming out.