Rebar and wire rod markets continued steady for yet another week, even as supply availability remains limited, especially in the US Midwest, market insiders told SteelOrbis. Prices remain steady even as oil prices continued lower following the June 18 signing of the most recent US-Iran peace deal expected to go into effect Friday, June 19.
The 14-paragraph memorandum of understanding, which includes assurances that Iran will never develop a nuclear weapon, provides for an extended 60-day ceasefire, and will re-open the contested Strait of Hormuz which has been closed several times since the conflict began in late February, resulting in a near doubling in global oil prices. At current, US benchmark West Texas Intermediate crude oil (WTI) stands at $73.50-$75.00 per barrel (/bbl), off from nearly $88/bbl reported one week ago. Global oil prices peaked in March this year at $118-$120/bbl amid heightened global geopolitical tensions as a result of the Mideast conflict, where 20 percent of global oil flows.
The interim peace deal, which is hoped will result in a final agreement with Iran over the next 60 days, is important for commodity markets such as steel, because the resulting increase in global oil prices along with heightenend freight and insurance costs for steel importers, has led to higher fixed costs for producers of steel and other commodities in the US and abroad. Analyst say that rising commodity and energy pricing has worsened US inflation levels.
And while market sentiment is more positive with the new peace deal in the works, many of the same bullish US steel market fundamentals remain in play, resulting in flat pricing, insiders say.
“Construction spending is up, order backlogs are higher, however, confidence that pricing will decline short term remains limited,” remarked one US Midwest long steel insider. “US mills are happy that they are making money, but at the same time, imports are still not coming in.”
In the domestic rebar market, Midwest rebar on an FOB mill basis remained steady for a fifth week at $47.00-48.00/cwt. ($940-960/nt or $1,036-1,058/mt), up from $46.00-47.00/cwt., ($920-940/nt or $1,014-1,036/mt) earlier. SteelOrbis yearly pricing data shows domestic rebar prices remain about 24 percent higher on an equivalent weekly basis.
Long steel importers report rebar pricing on the US Gulf Coast for September delivery near parity with recent domestic sales at $49.00-$50.00/cwt., however, longer lead times and continued market uncertainty continues to give domestic supply and edge in week-to-week spot trade, they said.
The Midwest insider added that even though US mills are gearing up to produce more supply to cover increased data center and infrastructure-related steel requirements, local supplies remains tight for truckload quantity tonnage, especially in the Midwest.
In the local wire rod markets, spot pricing on the US Gulf Coast remained stable on an FOB mill basis at $50.00-51.00/cwt., ($1,000-1,020/nt or $1,102-1,124/mt).
“Like last year, we’re expecting US mills to allocate supply again this fall,” remarked another US East Coast long steel insider. “Last year, mills blamed it on a lack of imports. Imports now are one the rise, but US mills report that they don’t have any excess capacity available, even with two new (rebar) mills expected to be in full production soon.”
CMC’s 500,000-ton per year CMC Steel West Virginia micro-mill in Berkeley County, was expected to begin producing rebar this month, while Nucor’s 430,000-ton per year micro-mill at Lexington, North Carolina, opened in late May, servicing the corridor between Washington, DC and Atlanta, Ga., where infrastructure and data center-related steel demand is forecast to increase.
