Despite an expected slight up-tick in scrap pricing, US domestic merchant bar prices continue their downward trend, with spot deals still offered well below listed prices.
While official domestic merchant bar prices have not changed since a $2.00 cwt. ($44 /mt or $40 /nt) decrease a couple weeks ago and continue to range from about $33.05 cwt. to $38.25 cwt. ($729 /mt to $843 /mt or $661 /nt to $765 /nt) ex-mill depending on size, shape and thickness, SteelOrbis has learned that most material is offered at below the listed prices and that the bigger players out there are receiving offers for as low as $28.00 cwt. ($617 /mt or $560 /nt) depending on order specifics and booking volume. Despite the notion that lowering prices does not lead to higher demand, domestic mills may be feeling pressure to lower prices again to reestablish a realistic "official" price list.
Furthermore, service centers continue to be in a de-stocking phase. According to the latest Metal Service Center Institute (MSCI)'s shipment and inventory report, despite a recent improvement in inventory levels for total steel products combined in March, daily shipments and monthly shipments of steel bar declined from 11,700 nt per day and 234,000 nt per month in February, to 10,400 nt per day and 230,000 nt per month in March. While total steel bar inventories were 256,000 nt less, at 852,000 nt, in March 2009 compared to March 2008, March 2009 inventory overhang was estimated at 3.7 months at current shipping rates compared to only about 2.6 months for the same period last year.
And while some long products may get a slight boost next month, as shredded scrap prices are expected to increase by about $10 /lt to $15 /lt, thanks to strong scrap exports, the excess inventory overhang for merchant bar products will likely trump any effect scrap prices may have had on merchant bar prices.
On the import side, Mexico remains the most competitive foreign source offering merchant bars to the US, while Korea and Turkey, who were aggressive earlier in the year, have not been able to compete with the small and quick deliveries offered by Mexican and US mills.
Mexican offers remain about $2.00 cwt. ($44 /mt or $40 /nt) lower than US domestic offers, and can be found for around $26.00 cwt. ($573 /mt or $520 /nt) delivered to California and Texas, depending on order specifics.
Meanwhile, most Turkish scrap and longs prices continue to slowly increase in their home market and Turkish mills have been unable and unwilling to match or beat the lower Mexican and US domestic prices. Traders are still seeing some Turkish offers for around $31.00 cwt. ($683 /mt or $620 /nt) duty-paid, FOB loaded truck in US Gulf ports; however, that price point is not even close to being low enough to generate any interest from prospective buyers.
Similarly, most Korean offers haven't seen much traction since January and were last 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.
License Data from the US Steel Import Monitoring and Analysis System (SIMA) show that a total of 5,487 mt of merchant bar products were imported to the US in March, with the top two importers being Canada at 3,066 mt and Mexico, at 1,624 mt. Turkey and Korea imported 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).
