Although shredded scrap is forecasted to rise this month, domestic rebar mills have not been able to firm up prices, and will likely respond with a sideways move.
Spot prices for rebar have not dropped measurably from last week's range of $30.75-$31.25 cwt. ($678-$689/mt or $615-$625/nt) ex-mill, but there have been some deals reported as low as $30.00 cwt. ($661/mt or $600/nt) ex-mill. Typically, when a scrap increase is imminent, mills are able to firm up their prices somewhat, or at least prevent them from sliding. However, considering the current pricing situation with domestic rebar, mills will likely respond to the projected $30/long ton increase in shredded scrap with a comparable decrease in base prices, keeping transaction prices level. But even this sideways move is not guaranteed to be accepted. Weak demand still has significant influence over price acceptance, as evidenced in the last few weeks of spot price softening.
According to recently released data, the construction industry should see improvement ahead, but not everyone is seeing the future with rose-tinted glasses. Already, September construction spending figures surpassed those from the month prior--according to the US Department of Commerce, the seasonally adjusted annual rate was $801.7 billion in September, compared to the revised August estimate of $797.5 billion. Additionally, many believe the results of Tuesday's US election will spell significant recovery in the construction industry. Jim Elmer, National Chairman of the Associated Builders and Contractors, was quoted as saying "A cloud of uncertainty has hung over the construction industry as projects remain on hold while business owners brace for the next big government mandate or tax hike." Elmer said that the new Republican-led Congress will "pave the way to create jobs, cut taxes and halt the big government assault on America's small businesses so that construction and all other industries can get back to work." However, rebar distributors throughout the US are not as enthusiastic about the construction industry--one East Coast distributor said that any further economic expansion or contraction will happen regardless of which political party is in power. Overall, many in the steel industry do not expect to see substantial recovery until the end of 2011.
As for rebar imports, offers have remained the same since last week, as US buyers are still reluctant to take chances with long lead times going into the winter months. Turkish mills would still like to raise US offers, based on the higher prices they are paying for scrap, but they are aware of the relative unattractiveness of their prices. For now, prices are still in the range of $29.75-$30.75 cwt. ($656-$678/mt or $595-$615/nt) duty paid FOB loaded truck in US Gulf ports.
South of the border, Mexican offers to the US are more or less the same, with a few deals reported slightly under the average range of $28.00-$29.00 cwt. ($617-$639/mt or $560-$580/nt) duty paid FOB delivered to US border states. However, such deals-approximately $0.25 cwt. ($5.50/mt or $5/nt) under the low end of the range-are not typical, and do not represent any sort of downward trend for Mexican offers.