As our last report predicted, Nucor has raised transaction prices for rebar shipments in July, despite the drop seen in shredded scrap prices.
The North American rebar leader increased July prices by a total of $35 /nt ($38.58 /mt or $1.75 cwt.) from the previous month, by decreasing its raw material surcharge (RMS) by $25 /nt ($27.56 /mt or $1.25 cwt.) while raising base prices by $60 /nt ($66 /mt or $3.00 cwt.). Taking into account the net $35 /nt increase, the new US domestic rebar price for July is $48.50 cwt. to $49.00 cwt. ex-mill.
Although Nucor usually opts to keep prices stable when its raw material prices drop, the company correctly assessed the somewhat unusual current market situation, deciding to take advantage of the tight market and get their prices closer to the much higher priced import material. Even with the $1.75 cwt. price increase, the domestic numbers are still significantly under new import offers.
Distributors and traders are still selling their inventories at 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, but they are expected to raise their numbers by at least the same amount as the domestic increase. Gulf traders still have some material from Turkey - material that has yet to arrive - at a purchase price of $51.00 cwt. to $52.00 cwt. ($1,124 /mt to $1,146 /mt or $1,020 /nt to $1,040 /nt), and will raise their prices accordingly when this material arrives. Meanwhile, new offers from Turkey are astronomically high, at around $62.00 cwt. to $63.00 cwt. ($1,367 /mt to $1,389 /mt or $1,240 /nt to $1,260 /nt) and, needless to say, no one is biting on them.
As mentioned in our previous reports, with no material from Turkey being purchased in several months, very little import rebar will arrive this summer, except for some scattered Mexican and Japanese offers. Currently, Mexican mills are offering at approximately $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, and from $51.00 cwt. to $52.00 cwt. in Texas and Florida.
Though import rebar arrivals to the US rose to 157,383 mt in April (based on census data from the US Import Administration), license data for May show a significant decrease in rebar imports. License data show 46,716 mt in total rebar imports for May, with the vast majority, 37,680 mt, coming from Mexico. After Mexico, the largest sources in May were Japan, at 4,714 mt; Dominican Republic, at 2,546 mt; Canada, at 1,436 mt; and Germany, at 217 mt. License data show that Turkey, which supplied over 90,000 mt in April, did not export a statistically significant amount of tons in May.