The US domestic merchant bar market has seen some rather significant price declines over the past couple months, and after last week's $2.00 cwt. ($44 /mt or $40 /nt) drop, distributors are just hoping for prices to remain relatively neutral over the next couple months until, hopefully, demand improves.
While some US domestic longs products such as rebar have begun demonstrating signs of stabilizing, domestic merchant bar prices are expected to continue to remain soft, at least until demand improves or the price gap between rebars and merchant bars, which is currently about $9.00 cwt. ($198 /mt or $180 /nt), narrows.
However, despite shredded scrap prices being down $15 /long ton from last month, scrap prices may begin demonstrating some stability in May, which could prevent merchant bars from enduring another significant decrease.
As a result of last week's decrease, the official domestic range for merchant bar products currently is 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. Despite the recently established range, most domestic mills will remain flexible and continue to be open to negotiations for sizable and quick orders.
Moving forward, despite the fact that some smaller domestic merchant bar distributors have managed to fill orders here and there with a little more frequency over the past couple weeks, and the fact that mills' production rates have continued to remain low for several months, demand currently remains too weak to expect an up-tick any time soon.
On the import side, while Mexico remains competitive with US domestic mills, most of the other foreign sources, such as Korea and Turkey, who were aggressive earlier in the year, have, for the most part, been avoided by traders in recent weeks due to their higher asking prices.
Mexican mills kept pace with Nucor's announcement last week and lowered their merchant bar offers to the US by $2.00 cwt. ($44 /mt or $40 /nt), with most offers now ranging from approximately $30.00 cwt. to $32.00 cwt. ($705 /mt to $750 /mt or $640 /nt to $680 /nt) delivered to California and Texas. Mexican mills may still be willing to negotiate prices down further for certain bookings, but their willingness to do so has diminished somewhat in recent weeks, as their base offers have become more attractive.
Most Korean offers 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, but most traders are not requesting offers from Korea as of late because they know they will not be able to compete with Mexican or US domestic offers.
Meanwhile, Turkish scrap and longs prices have been increasing recently, which has not helped their cause of attracting business from the US. With long lead times, lack of available vessels and prices that are higher than US domestic numbers, traders do not expect to see any competitive Turkish merchant bar offers for a while.