There hasn't been a lot of positive news for the US steel markets over the past several months, in particular, for the US merchant bar market as of late; however, last week's domestic merchant bar price announcement was at least a welcome sight for most steel professionals.
This month's announcement came on the heels of some rather unusual merchant bar price moves last month. As a reminder, Nucor Bar Mill Group announced a transaction price decrease of $1.50 cwt. ($33 /mt or $30 /nt) for merchant bar and structural products effective February 17, 2009 and then decreased transaction prices by an additional $5.00 cwt. ($110 /mt or $100 /nt) just two weeks later. Some traders and service centers feared that there would be another decrease to net prices this month; however, Nucor apparently deemed last month's big decrease of $6.50 cwt. to be sufficient for now, keeping transaction prices the same by way of increasing the base prices by $1.25 cwt. ($28 /mt or $25 /nt), the same amount as the raw materials surcharge decreased.
As a result, the published domestic range for merchant bar products remains at $35.05 cwt. to $40.25 cwt. ($773 /mt to $887 /mt or $701 /nt to $805 /nt) ex-mill depending on size, shape and thickness. That does not mean, however, that all the mills are sticking to their list prices. Many are flexible and are offering discounts towards the bottom of this range or even below it, depending on order size and for quick orders.
Moving forward, the continuing weakness in merchant bar demand, combined with the fact that rebar, a product that is generally produced in the same rolling facilities, continues to be offered at about $10.00 cwt. ($220 /mt or $200 /nt) lower than merchant bar prices, suggest that domestic merchant bar prices still have more room to fall before bottoming out.
On the import side, most foreign mills are finding it increasingly difficult to generate serious interest from buyers, who could get the same product domestically, due to lead times and the fact that domestic mills have pretty much vowed not to lose any potential bookings, especially to importing countries. It doesn't make much sense right now for most buyers to purchase overseas products, when the timeliness and even cost of the order will be more beneficial if buying domestically. Only some hard-to-find light sections are imported, generally by containers from Turkey, Taiwan and South Korea.
Other than the above sources, Mexico continues to be the most competitive and successful foreign source offering merchant bar products to the US, primarily due to their proximity to US borders and the flexibility of Mexican mills to negotiate deals and produce quick orders. While most merchant bar offers to the US continue to be in the general range of about $32.00 cwt. to $34.00 cwt. ($705 /mt to $750 /mt or $640 /nt to $680 /nt) delivered to California and Texas, offers appear to be trending down and could include discounts depending on order specifics.
On the other hand, South Korean merchant bar offers to the US, which had been competitive for the West Coast earlier in the year, are now finding very little buying interest from the US. Their offerings can be found in a similar range as Mexican mills' with the possibility of $32.00 cwt. ($705 /mt or $640 /nt) offered at the low end of the range; however, long lead times have greatly contributed to most US traders not even considering South Korea as a viable merchant bar import option.
Turkish merchant bar offerings to the US are in a similar situation as Korean offers, generating little interest amongst US buyers. Nonetheless, most Turkish merchant bar offerings to the US may be found at a little lower range than Korean offers, at around $31.00 cwt (most break bulk offers) to $35.00 cwt (by container). ($683 /mt to $772 /mt or $620 /nt to $700 /nt) duty-paid, FOB loaded truck in US Gulf ports, depending on the port and product specifics.