US rebar prices lose steam despite scrap increase

In the context of competitive market pressures and continued weak demand, US rebar prices have registered a modest decline since last week.

There have been two interesting announcements made in the US long product market within the last week – One was a surprising $50/nt ($55/mt or $2.50 cwt.) increase on wire rod and coiled rebar prices from Evraz Rocky Mountain Steel. Another was an announcement from Nucor Bar Mill Group's Kankakee, Illinois and Jewett, Texas divisions stating that merchant bar and structural product prices would decrease by $40/nt ($44/mt or $2.00 cwt.). However, there has yet to be any widespread official price announcement made on straight-length domestic rebar this month.

Nevertheless, despite the absence of an official price decrease announcement, certain US rebar customers have been informed, since Nucor's $40/nt merchant bar/structural decrease was announced last week, that their prices would also be cut by the same amount (up to $2.00 cwt.). Even though US shredded scrap prices are up about $20/ton this month and some longs firms (like Evraz) are still trying to recoup their raw material costs from August, it seems that demand for rebar is proving too weak for domestic producers to keep prices on an upward course.

Not all buyers have seen their prices slashed; for the most part, only buyers that were buying at the higher end of the previous price range have reported a price decrease. However, on average, US domestic rebar offers have dropped by about $1.00 cwt. ($22/mt or $20/nt) this week from last.

Accordingly, most offers now range from approximately $24.50 cwt. to $25.00 cwt. ($540/mt to $551/mt or $490 /nt to $500 /nt) ex-mill. Prices are not expected to drop any further in the near-term and may stay at the current range for a while. Nucor's price drop was reportedly an attempt by the firm to get its offers in line with the lower prices of Commercial Metals Company (CMC) and certain distributors. However, current raw material costs seem prohibitive of any further price decreases.

Meanwhile, import rebar offers for the US have remained unchanged since last week. Mexican producers have continued efforts to raise prices within the domestic Mexican market but are still encountering some resistance. Still, despite lack of US interest at the current Mexican import offer level, Mexican sources are not desperate for US business at present and are in no hurry to lower prices. Most Mexican rebar offers to the US remain in the range of $24.50 cwt. to $25.50 cwt. ($540 /mt to $562 /mt $490 /nt to $510 /nt) delivered to California and Texas.

Turkish rebar offers for the US are also unchanged on the whole since last week's offer levels. However, the sentiment from traders is that Turkish longs mills will soon lower prices slightly, as scrap costs are also slightly decreasing, and they are still struggling to get new bookings. This week's decline in US domestic rebar prices makes it even more likely that Turkish mills will try to lower their prices for the US. For now, most offers from Turkey continue to range from $26.00 cwt. to $27.00 cwt. ($573 /mt to $595 /mt or $520 /nt to $540 /nt) duty-paid, FOB loaded truck in US Gulf ports.

With Mexican import rebar offers trending sideways to slightly up, and Turkish offers trending sideways to slightly down, the overall price trend for import rebar offers to the US is still sideways.