Even with the recent indications that US shredded scrap prices will stay flat in August, the pricing trend for the US domestic rebar market is still trending upwards due to the high priced import offers.
Taking into account the latest domestic rebar price increase of $65 /nt for August shipments, most domestic rebar offers now range from approximately $52.25 cwt. to $52.75 cwt. ($1,152 /mt to $1,163 /mt or $1,045 /nt to $1,055 /nt) ex-mill, still well below the international price levels.
Domestic prices are at least several dollars cwt. below Mexican and Japanese import levels. Although a large increase for September is not expected if scrap prices don't increase, even if scrap remains stable domestic mills should be able to achieve an increase of $20 /nt to $40 /nt, which would bring the domestic prices closer to, but not in excess of, their closest import competition.
SteelOrbis hears that interest in exports is growing, but that domestic mills are still in the early stages and for the most part do not have a real export program yet. Currently, they are seeing strong enough sales from their domestic customers, who are still their first priority. Still, exports are an exciting prospect for US producers, and some companies are already seeing strong gains from them - Nucor recently attributed its record-breaking second quarter 2008 results partially to its increase in exports. For now though, exporting is still not a permanent fixture of the US longs business.
On the import side, traders are still offering mostly at a range of approximately $52.00 cwt. to $54.00 cwt. ($1,146 /mt to $1,191 /mt or $1,040 /nt to $1,080 /nt) FOB loaded truck, in US Gulf ports, with larger sizes (#4s and larger) trending towards the lower end of this range, and #3s at the higher end. They would love to offer higher, but there are no takers because the domestic prices are too close for their customers to gamble on. Still, the pricing trend for these offers is slightly up, as the only new import asking prices, from Mexico and Japan, continue to rise; and the traditional heavy hitter Turkey is completely focused on its overpriced markets in the Middle East.
Mexican mills recently raised their rebar numbers for the US, and these offers are now being sold at a range of $55.00 cwt. to $56.00 cwt. delivered to the Gulf, up $1.00 cwt. from last week. The mills are pushing for even higher numbers, but they have not been accepted by the market yet.
New offers from Turkey are still out of sight, though some traders believe that the Middle East market (the only market that is paying Turkey's high asking prices) by itself may not be enough to continue keeping the Turkish mills' order books full, especially now that China has started doing some shipments into the Middle East.
As one trader told SteelOrbis this week, "It may only be a matter of time before the Turkish numbers come back to earth. Then again, the world market might just catch up to them, like it did several times this year."
The world market, however, isn't showing signs of catching up just yet. Along with scrap price decreases in Asia and the CIS, billets in those regions are also decreasing. It remains to be seen if this negative trend will spread to rebars as well. One thing is for sure: most of the massive rebar price increases are now behind us. Therefore, the North American rebar market, too, though still going forward, is expected to shift into a lower gear.