The US merchant bar market continues to be dominated by weak demand; however, many distributors believe that if prices do not tumble much further and if they can just fill spot orders here and there, they will be in a good position once demand increases.
While filling orders to keep inventories low continues to be a struggle for most distributors, it appears that many have been managing this feat relatively well despite the turbulent economy. According to the latest Metal Service Center Institute (MSCI)'s shipment and inventory report, daily shipments of steel bar declined from 12,600 nt in January to about 11,700 nt in February; however, total inventories also declined in February to 899,200 nt from approximately 919,300 nt in January. Nonetheless, according to current shipping rates, average service center inventory overhang still increased in February from January, at 3.8 months and 3.5 months respectively.
Despite the continued weakness in demand, the official domestic range for merchant bar products has not changed since the first week of March, remaining at roughly $35.05 cwt. to $40.25 cwt. ($773 /mt to $887 /mt or $701 /nt to $805 /nt) ex-mill depending on size, shape and thickness. However, most domestic mills remain flexible and are still willing to negotiate deals and offer discounts for under their listed prices depending on order size and for quick orders.
Moving forward, many merchant bar distributors believe that mills will keep prices neutral in April, mostly due to that fact that lower prices have not contributed to an increase in bookings, although another decrease of around $0.50 cwt. to $1.00 cwt. ($11 /mt to $22 /mt or $10 /nt to $20 /nt) would not be shocking especially considering an expected decrease of about $10 /lt to $15 /lt in shredded scrap prices.
Merchant bar offers have remained fairly neutral on the import side as well over the past couple weeks, with prices offered at about $2.00 cwt. to $3.00 cwt. ($44 /mt to $66 /mt or $40 /nt to $60 /nt) under US domestic offers. With the exception of some regularly imported tonnage from Mexico, some hard-to-find light sections may be imported from Turkey, Taiwan or Korea, generally by containers.
Mexican mills' ability to produce quick orders and their proximity to US borders continue to be the driving forces separating them from the merchant bar importer competition. While most offers continue to be in the general range of about $32.00 cwt. to $34.00 cwt. ($705 /mt to $750 /mt or $640 /nt to $680 /nt) delivered to California and Texas, the price trend is slightly down, and offers may be negotiated below that range, as mills have demonstrated some willingness to compete with aggressive US domestic offers.
While SteelOrbis has learned that some tonnage of large angles have been imported from Korea over the past couple weeks, Korean offers and import activity have quieted considerably since the end of January. Nonetheless, most Korean offers may be found in the general range of $32.00 cwt. to $34.00 cwt. ($705 /mt to $750 /mt or $640 /nt to $680 /nt) duty-paid, FOB loaded truck in West Coast ports; however, long lead times in this uncertain market have left most traders not considering Korea a viable option for importing merchant bars to the US.
The same can be said for Turkish merchant bar offers, in the sense that long lead times are making it difficult for traders to justify booking. Furthermore, Turkish domestic prices on long products have slightly increased over the past couple weeks and are beginning to affect prices on their exported longs products. Nonetheless, Turkish merchant bar import offers to the US are trending sideways for the time being, and are still in the general range of about $31.00 cwt. (most break bulk offers) to $35.00 cwt. (by container). ($683 /mt to $772 /mt or $620 /nt to $700 /nt) duty-paid, FOB loaded truck in US Gulf ports, depending on the port and product specifics.
License Data from the US Steel Import Monitoring and Analysis System (SIMA) demonstrate that while Mexico exported 2,480 mt of the total 4,739 mt merchant bar tonnage to the US during March, Turkey and Korea exported 555 mt and 109 mt respectively. The data is for light sections of carbon and alloy steel, U, I, L, T and H shapes of 3" or smaller (does not include rounds, squares, or flats).