US domestic merchant bar market – Price increase expected

With shredded scrap prices rising, buyers are expecting to see an increase in domestic merchant bar prices shortly. After bottoming out in November, the domestic scrap market has bounced back and prices have been increasing slightly for the last two months. Scrap is a good determinant as to what will happen in other markets. As raw material prices are now increasing, it is a strong possibility that Nucor will raise prices for merchant bars this month, giving a domestic pricing trend which is now slightly up. For now, domestic merchant bar prices still range from $29.60 cwt. (e.g. 2 x 2 x ¼ angles) to $37.70 cwt. ($681 /mt to $848 /mt or $618 /nt to $769 /nt), depending on size, shape, and thickness. Even though this is a wide range, most domestic merchant bar prices tend towards the lower end of the spectrum. The merchant bar market is relatively strong. Non-residential construction is still holding on despite the winter months, contributing to the heavy demand. Many import bookings are now taking place as service centers are getting ready to accept new arrivals. Inventories are healthy right now, but not at a level where service centers are attempting to quickly reduce their inventories. Instead, service centers are slowly cleaning out their stock, making room for April and May arrivals. As for imports, Taiwanese numbers have unexpectedly gone down by $0.50 cwt. since our last report. This decrease in price is not directly from the mill, however. The number of traders offering ASTM standard merchant bars has recently increased significantly, so in order to compete, traders have lowered their offers. Taiwanese merchant bar offers now range from $29.50 cwt. to $30.50 cwt. ($650 /mt to $672 /mt or $590 /nt to $610 /nt) FOB loaded-truck, at Gulf and West Coast ports, but are more dominant on the West Coast. Offerings from Turkey have remained the same since our last report and still range from $32.00 cwt. to $33.00 cwt. ($705 /mt to $727 /mt or $640 /nt to $660 /nt) FOB loaded-truck, US Gulf ports. There have been an increasing number of Chinese merchant bar imports coming into the US in the past months. Current offers now range from $29.50 cwt. to $30.50 cwt. ($650 /mt to $672 /mt or $590 /nt to $610 /nt) FOB loaded-truck, at Gulf and West Coast ports. Although Taiwanese merchant bar prices have decreased since our last report, the import pricing trend is still slightly up. With Asian and Black Sea billet prices continuing to rise and demand in the US holding firm, market players expect an increase in merchant bar prices to occur in the near future.