US shredded scrap prices have rebounded by over $100/long ton this month; however, due to the continued weak demand conditions, it is unlikely that US rebar prices will rise in turn.
In the first two weeks of December, US shredded scrap prices have increased by $105 to $110/lt depending on the region. And yet, prices for finished products like rebar are not likely to see a similar rebound, as demand remains very soft.
Domestic rebar spot prices have slipped in recent weeks to the current level of about $28.00 cwt. to $28.50 cwt. ($617 /mt to $628 /mt or $560 /nt to $570 /nt) ex-mill. Once December scrap prices are settled, domestic rebar leader Nucor will certainly come out with a price announcement for long products. While in a strong market, scrap price hikes will quickly be passed along to steel customers, in this soft market, the producers will almost certainly eat the added scrap costs. There is even a good chance that US rebar prices will slip even further before the end of the year, if not officially, then in the form of private discounts and rebates.
As for import offers to the US, last week's price range of $25.00 cwt. to $26.00 cwt. ($551 /mt to $573 /mt or $500 /nt to $520 /nt) duty-paid FOB loaded truck in US Gulf still stands for new offers, though the market has been quiet since last week, as Turkish mills are closed for a local holiday. Spot material that Gulf area traders are offering for immediate delivery are up to a few dollars per hundredweight above this range, however, as many traders have a surplus of unsold import rebar that was purchased when prices were much higher. Traders are able to achieve these higher numbers as buyers, who don't want to keep inventory in this declining market, are needing to buy small amounts of tonnage to fill spot shortages.
Mexican offers for January deliveries are still at a high $30.00 cwt. to $31.00 cwt. ($661 /mt to $683 /mt or $600 /nt to $620 /nt) at the border, and delivered to an inland destination for some large buyers; however, they are getting very little traction at this price level.
The pricing trend for import rebar remains slightly down due to the weak demand around the world, but there are some signs that a turnaround might not be too far off. As mentioned above, spot shortages are developing, particularly for certain sizes and grades -- For example #4, 40-foot Grade 60 is hard to find. While traders still have some expensive material on the ground, distributors have liquidated quite a bit of inventory in recent weeks. Additionally, traders report that rebar tonnage at the Port of Houston is at historically low levels.
The spot shortages and lack of new import arrivals may hold the key to the US rebar market recovery once demand starts to pick up. License Data collected through December 2 from the Steel Import Monitor and Analysis (SIMA) system show that in November 2008, import rebar tons totaled only 20,687 mt -- their lowest monthly level in over a year. Turkey remained the largest import source in November, supplying 13,191 mt, followed by Mexico, at 5,736 mt, Dominican Republic, at 1,262 mt and Germany at 447 mt.