As SteelOrbis predicted, leading US rebar producer Nucor announced some hefty price increases this week, reflecting the huge price hikes seen for shredded scrap this month as well as the skyrocketing import rebar prices.
For February shipments, the company will raise the raw materials surcharge (RMS), which covers the cost of scrap, by $82/nt ($90/mt or $4.10 cwt.), while decreasing base prices for rebar by $22/nt ($24/mt or $1.10 cwt.), resulting in a net increase of $60/nt ($66/mt or $3.00 cwt.).
In addition, Nucor will eliminate the so-called "foreign fighter" discount that had been applied to 20-ft length rebars, resulting in an additional price increase of $22/nt to $40/nt, depending on the mill/region, for 20-ft rebars in sizes 10mm (#3) to 19mm (#6) grade 40 and grade 60, effective immediately. As the discount was intended to keep out imports of these commonly imported sizes, by removing the discount, Nucor is acknowledging that import prices for these rebars are now high enough that they no longer pose a competitive threat.
The largest foreign fighter discount was $40/nt ($44/mt or $2.00 cwt.), effective in the US Gulf region, the largest recipient of foreign rebars.
Taking into account these price increases, the new domestic numbers for February shipments range from approximately $36.15 cwt. to $36.65 cwt. ($797/mt to $808/mt or $723/nt to $733/nt) FOB mill.
The domestic pricing trend for rebar has shifted to neutral since the market will need some time to digest these increases. Also, scrap gains in the coming months should not be as steep as they were in January; they could even see a small downward correction. In the meantime, rebar demand remains relatively flat due to the housing mess, though it is slightly better than demand for wire rod.
Apparent rebar consumption in the US (calculated from domestic production and shipments, along with import and export shipments) from January through November 2007 totaled 8,851,985 nt, which on an annualized basis is 9,656,711, nt (8,760,472 mt), down from the 9,705,616 nt (8,804,838 mt) consumed by the US in 2006. While consumption in 2007 was slightly less than that in 2006, as the figures show, rebar is not experiencing a major fallout of demand. In fact, the 2007 annualized total is a good deal above that for 2005, which was 8,608,796 nt (7,809,814 mt).
Import prices have also risen in the last week, with most offers increasing by approximately $0.50 cwt. ($11/mt or $10/nt) Most traders are offering import rebar to US customers at a range of $34.50 cwt. to $35.50 cwt. ($761/mt to $783/mt or $690/nt to $710/nt) FOB loaded truck, in Houston.
The majority of these offers are of Turkish origin, and there are some offers of Mexican origin that are also coming in at this range. New offering prices from Turkish mills, however, are much higher than this range, and that will soon be reflected in traders' offering prices. For this reason, the pricing trend for import rebar remains strongly up.