Firm prices and growing demand have boosted the US merchant bar market's recovery in the last month.
Although merchant bar has long been a small piece of the domestic long product pie, it is currently one of the market's brightest spots, as far as prices and demand go. Domestic mills, which had no problem getting their full asking prices after last month's $3.25 cwt ($72/mt or $65/nt) price increase for February shipments, kept prices level for March shipments, ensuring that prices will remain firm throughout this month and into the next. Current domestic offers are 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.
Strong activity in the agricultural equipment sector--which is now ramping up for the produce season in a few months--has helped boost merchant bar demand in the US, although some in the market are quick to point out that "improved" sales volumes are coming up from a low base--demand is not quite at pre-2008 levels, but definitely better than 2009 and most of 2010. Steady improvement in the manufacturing sector is also lifting up merchant bar demand. According to the Institute of Supply Management, the Purchasing Managers Index for January (60.8 percent) was at the highest level since May 2004. Even though steel-related growth in manufacturing did not improve by leaps and bounds, "a little is a lot in that industry," said one East Coast merchant bar distributor.
As for imports, new inquiries are quiet for the moment, but distributors are taking advantage of newly-arriving shipments from Turkey with price tags as low as $35.00-$37.00 cwt. ($772-$816/mt or $700-$740/nt) duty-paid FOB load truck at US Gulf ports. Orders called in today, however, would be quoted more in the range of $44.00-$46.00 cwt. ($970-$1,014/mt or $880-$920/nt) duty-paid FOB load truck at US Gulf ports.
Unless import prices fall into levels that are more competitive with domestic offers, the import trend will likely level out for the remainder of Q1. As it is, January shipment levels were up approximately 45 percent from December levels. According to license data from the US Import Monitoring and Analysis System (SIMA), the US imported 8,677 mt of merchant bar in January, compared to 5,982 in December (preliminary census data)--reflecting the highest level since May 2010. While Mexico remained the number two source with little month-to-month fluctuation, Canada shipped a significantly higher amount of merchant bars in January (6,217 mt compared to 2,829 mt the prior month). Turkey, on the other hand, decreased their level of merchant bar exports to the US, only shipping 157 mt in January compared to 600 mt in December. However, US distributors report a decent amount arriving now and into March, so February data should reflect an increase in imported Turkish merchant bar.