Mild inventory replacement has brought about encouraging purchasing activity in the domestic rebar market, although import activity is still quiet.
While spot prices for domestic rebar had been approximately $0.50-$1.00 cwt. ($11-$22/mt or $10-$20/nt) less than most mill offers since mills announced a $1.00 cwt. price increase in mid-September, prices have firmed up in the last week, bringing most transactions into the mill asking range of $31.75-$32.25 cwt. ($700-$711/mt or $635-$645/nt) ex-mill. Deals for large orders are still available, though, but for no more than $0.50 cwt. less than asking prices.
The reasoning behind rebar buyers' sudden change of heart and willingness to accept the latest price increase is that they have found themselves with nearly depleted inventories at a time when demand for rebar is getting marginally better. According to the US Census Bureau, construction spending rose 0.4 percent month-on-month in August, bolstered by increases in public construction activity. Additionally, housing starts were up 10.5 percent in August, and construction permits, believed to be one of the most accurate gauges of home building, increased by 1.8 percent in August. While these increases aren't substantial, they could very well be the start of some upward momentum that could carry construction-related steel markets through the traditionally slow fall and winter months.
Import activity for rebar, on the other hand, has been remarkably quiet. The local rebar market in Turkey is slightly soft at the moment, but Turkish mills are hesitant to lower prices for US imports because the US dollar is currently weak against the Turkish lira. However, many insiders believe that as soon as the October scrap prices are announced in the US (likely later this week), and scrap prices come down as expected, Turkish mills will probably lower their import offerings to the US as well. For now, however, import prices remain in the range of $30.00-$31.00 cwt. ($661-$683/mt or $600-$620/nt) FOB duty-paid loaded truck in US Gulf ports, but there are little to no bookings being heard.
South of border, Mexican mills have kept their prices stable, but they are also keeping an eye on the US scrap situation-if they think shredded scrap pricing will fall into the lower end of the expected $20-$40/long ton range, and that US mills will subsequently try to keep rebar prices stable, Mexican mills might have to rethink the $1.00 cwt. increase they quietly announced two weeks ago. Until then, prices are still in the $29.50-$30.50 cwt. ($650-$672/mt or $590-$610/nt) duty paid FOB delivered to US border states.