While US merchant bar demand is still strong, and mills have generally found little to no resistance getting full asking prices, new import offers could result in minor domestic flexibility.
Sources tell SteelOrbis that of all the long products, merchant bar remains one of the most active--in terms of purchasing and demand--and one of the most profitable. Agricultural equipment manufacturers continue to dominate the merchant bar market, while smaller sectors, such as solar and wind power, are also contributing to strong purchasing activity levels. As for prices, US domestic merchant bar mills have kept official asking prices level since raising them $3.25 cwt. ($72/mt or $65/nt) for February shipments, and they have found overall success concluding transactions at full published prices, which are currently in the range of $45.30-$50.50 cwt. ($999-$1,113/mt or $906-$1,010/nt) ex-mill, depending on size and shape.
Therefore, as new import offers have been made over the past few months priced comfortably underneath domestic offers, domestic mills have not paid much attention-until now. New offers for Turkish merchant bar have been heard at approximately $39.00-$42.00 cwt. ($860-$926/mt or $780-$840/nt) duty-paid FOB load truck at US Gulf ports--a sizeable spread from domestic prices. And as merchant bar has proved itself to be a steadily strengthening product, more and more US distributors are no longer gun shy about future shipments and have been looking into booking overseas, while domestic mills are finally taking notice. According to one East Coast distributor, mills have been calling around, trying to find out current import ideas, and some have hinted at potential flexibility in regards to official asking prices.
Currently, the flow of merchant bar imports into the US is not too extensive. As of April 12, the US has only imported 1,849 mt of merchant bars for the month, compared to 9,525 in March, according to license data from the US Import Monitoring and Analysis System (SIMA). However, tonnage levels reached only 2,327 mt by mid-March, so there's a possibility that late-month shipments could still reflect the overall upward momentum building this year (so far, average 2011 tonnage levels are beating 2010's average).
As for import sources, Canada remained the top source of imported merchant bar in March, with 5,569 mt, while the US imported 1,777 mt from Mexico and 1,526 mt from Turkey. Interestingly, as of mid-April, Turkey is the top source with 745 mt, compared to Canada's 415 mt and Mexico's 628 mt. Considering that Turkey has consistently been the number three source of imported merchant bar to the US, current import stats could confirm what US distributors are saying--that Turkish merchant bar is looking pretty attractive right now.
