While many expected the domestic rebar price increase to match the $28/long ton increase in shredded scrap, it actually increased by slightly less.
Early estimations of the increase in rebar prices were in the $25/nt ($1.25 cwt. or $28/mt) range, but in a letter to customers Monday, Nucor Bar Mill Group raised the raw materials surcharge (RMS) by $28/nt ($1.40 cwt. or $31/mt) and then decreased the base price by $8/nt ($0.40 cwt. or $9/mt). The net effect of this move is a transaction price increase of $20/nt ($1.00 cwt. or $22/mt), which reflects both the lousy demand situation and the desire of mills to not absorb all of their raw material costs.
In stark contrast to flat products mills, which announced price increases before official September scrap numbers were released, long product mills took their time, trying to make the best decision between their own needs and what the market demands. But an important question remains: what will be the base price that the imminent increase is added to? Spot prices for domestic rebar have fluctuated between $0.50-$1.00 cwt. ($11-$22/mt or $10-$20/nt) less than official prices in the last couple weeks, and it has been widely speculated the new increase would be added on top of "actual" prices, rather than "official" prices of $30.75-$31.25 cwt. ($678-$689/mt or $615-$625/nt) ex-mill. For now, there is a strong indication that the $20/nt increase will just bring current spot deals in line with the most recent "official" prices.
Overseas, the pricing trend for rebar is also up. Billet prices have increased in the Turkish market, lifting up local rebar prices by about $10/mt. However, the increase has not translated over to purchase offers in the US, mainly because current prices of $30.00-$31.00 cwt. ($661-$683/mt or $600-$620/nt) FOB duty-paid loaded truck in US Gulf ports are still unreasonably high.
South of the border, however, prices are currently neutral, as Mexican mills wait to see what US mills will do. Currently, prices are still in the range of $28.50-$29.50 cwt. ($628-$650/mt or $570-$590/nt) delivered to US border states, with some spot offers still heard at about $0.50 cwt. less.