Rebar mills are using scrap's stable trend to their advantage, effectively telling the market that current prices are not going anywhere.
While the US domestic rebar market did not exactly react positively to last month's announcement that July prices would increase by $1.00 cwt. ($22/mt or $20/nt), mills are holding the line and letting customers know that deals beneath the current spot range of $34.00-$35.00 cwt. ($750-$772/mt or $680-$700/nt) ex-mill will not be entertained. Furthermore, the neutral raw materials surcharge/transaction price announced late Tuesday has sent a message to distributors--especially those cutting deals on previous inventory--that they might as well start selling at replacement cost now, because the new prices aren't going anywhere.
It would seem that with sluggish demand levels in the US domestic rebar market, mills might be willing to be more flexible--but sources say they are tightly controlling production levels, keeping capacity utilization rates in the 70-75 percent range and employment rates minimal, so they can profit more from producing less.
US mills also have the benefit of soft import competition--Mexican rebar offers are still hovering in the same range as US spot prices: $34.00-$35.00 cwt. ($750-$772/mt or $680-$700/nt) DDP loaded truck delivered to US border states, and sources say their order books for the US are rather slim. Although Mexican mills typically mirror US rebar price movements, they might consider adjusting prices slightly to give US buyers some sort of incentive to import.
Overseas, Turkish prices have not moved in the last week as well, and there seems to be opposing trends when it comes to the country's rebar market. Domestically, rebar prices in Turkey are on an upward trend, helped in part by a recent increase in billet prices. Turkish mills have subsequently upped export offers as well, but have left offers to the US static, as US traders report they had enough difficulty garnering interest in the current range of $32.00-$33.00 cwt. ($705-$728/mt or $640-$660/nt) DDP loaded truck in US Gulf ports. Traders expect that the rebar import market will remain quiet for at least another week, which might give Turkish mills time to consider adjusting their price ideas to the US.