US rebar prices likely to rise along with scrap costs

With the robust rise seen in shredded scrap prices, there is a good chance that domestic rebar producers may up their prices for February shipments. Shredded scrap has risen $20 /nt to $30 /nt since last month, so major rebar producers like Nucor will have to raise raw material surcharges for February shipments. Since the market hasn't taken any turns for the worst since last month, it is likely that producers will keep rebar base prices the same or only slightly lower in February, which would result in a net increase in the overall transaction price. Of course another pessimistic scenario is that as the domestic rebar market is still a bit sluggish due to holidays and fourth quarter doldrums, it is possible that they will keep prices stable by decreasing the base price by the same amount as the raw material surcharge increase in order to encourage buying. Still, in our opinion, it is probably more likely that prices will go up, since the domestic rebar mills are relatively strong in Q1 (compared to Q4), and the mild winter around the world is allowing non-residential construction projects to flourish in the US and abroad. Domestic mills will probably follow the trend of the foreign mills and use this opportunity to raise net rebar prices. For now, US rebar prices are still ranging from $26.65 cwt. to $27.15 cwt. ($588 /mt to $599 /mt or $533 /nt to $543 /nt) ex-mill. The usual price extras apply for smaller sizes and grade 60. The pricing trend is slightly up at the moment. As regards import rebar, the pricing trend is now strongly up, as major overseas rebar source Turkey is raising both its domestic and export rebar prices, reflecting its strengthening home market. There is currently a lot of reluctance to offer to the US, as Turkish mills also suspect US prices will rise soon. And as far as import rebar for the Gulf market goes, the Turkish mills are the only game in town. Also, the increase in billet prices in Turkey and worldwide will further tighten up the world rebar market. Import offers are still hovering at about the same range as they were last week - the few traders that are offering import rebar are still quoting in a range of $25.50 cwt. to $26.50 cwt. ($562 /mt to $584 /mt or $510 /nt to $530 /nt) FOB loaded truck, in US Gulf ports. This level is set to rise soon. In the US, traders and distributors that were fighting to get rid of their excess rebar tonnage just one month ago are now buying again in order to replenish their inventories by March and April. The amount of import rebar tonnage coming into the US in January and February is minimal because there weren't too many orders placed in Q4. It looks like we are at the start of another upward cycle for import rebar buying.