US rebar prices have remained firm from last week, although the market conditions continue to be soft.
As we reported last week, even though Nucor announced that it would keep rebar prices stable in March, according to SteelOrbis' contacts, prices fell by approximately $30 /nt ($33 /mt or $1.50 cwt.) earlier this month, similar to the amount that scrap declined last month.
While domestic rebar prices haven't slipped further in the last week, US shredded scrap prices this week fell by an additional $25 /long ton, which will reduce the raw materials surcharge added by domestic mills by $25 /nt ($1.25 cwt. or $28 /mt). Nucor has yet to issue an official price announcement but it is very likely that the company will lower transaction prices for April, or possibly even take them down steeper than just the amount of the RMS decrease, as it recently did with merchant bars. But regardless of any official announcements, as long as demand remains weak, domestic mills will continue to offer special deals and discounts, and the spot price will continue to trend down.
For now, domestic spot prices for rebar still range from approximately $25.50 cwt. to $26.00 cwt. ($562 /mt to $573 /mt or $510 /nt to $520 /nt) FOB mill.
On the import side, the overall pricing trend for rebar is down as well, and sales offer prices have come down another notch since last week.
Most Turkish offer prices for May shipment have come down by an average of $0.50 cwt. ($11 /mt or $10 /nt) since last week, with most offers now found at a range of $22.50 cwt. to $23.50 cwt. ($496 /mt to $518 /mt or $450 /nt to $470 /nt) duty-paid, FOB loaded truck in US Gulf ports.
Mexican offers continue to be offered at a higher price than their Turkish counterparts, though Mexico's proximity to the US and shorter lead times make them a more viable import option. Mexican mills have been holding their prices firm in recent weeks, claiming a strengthened domestic demand, although there is some speculation that these mills do not have as strong order books as they are indicating and that their prices will eventually have to come down. For now, most offers range from $24.50 cwt. to $25.50 cwt. ($540 /mt to $562 /mt or $490 /nt to $510 /nt) loaded truck in Houston.
On the demand side, there is both good news and bad. Last week, President Obama announced the kick-start of stimulus-funded infrastructure projects, which should help boost US rebar consumption. But this week, fresh bad news on the housing front has been making headlines. A report released on Tuesday by the Integrated Asset Services LLC, a Denver, Colorado-based company, indicates that there was a "staggering" 3.5 percent plunge in house prices in January in the US, the worst single-month decline since its peak in November of 2006. Moreover, we learned this week that one out of five US homeowners owe more than what their property is worth. With the national unemployment rate at 8.1 percent (the highest since December 1983) and rising, the threat of foreclosure looms over the heads of many Americans.
While the new administration is working on efforts to aid struggling homeowners, with the increasing glut of empty homes, a pickup in private residential construction is not anticipated to occur anytime soon. Moreover, with the overall weak economic conditions, commercial construction is expected to continue to contract as well. For now, it seems that the US government's stimulus projects in the area of infrastructure are the only sliver of hope for US rebar consumption in the near term amid the overall gloomy conditions.