US domestic merchant bar market remains flat

As October approaches, the market for merchant bars is looking flat domestically, and stable for imports. The domestic merchant bar market is facing some slow times, with demand slowing and mills less busy than a few months ago. With demand determining the pricing trend, Nucor has decided to keep net transaction prices for merchant bars level for October 2006. Announced to customers mid September, Nucor increased their Raw Material Surcharge (RMS) for merchant bars by $15 /nt ($0.75 cwt.) to $88.00 /nt ($4.40 cwt.) for shipments effective October 1, 2006. To offset the increase in RMS, Nucor lowered their base prices for bars and structurals by the same amount causing transaction prices to remain at September levels for the month of October. Current domestic transaction prices for merchant bars still range from $30.90 cwt. to $38.45 cwt. ($681 /mt to $848 /mt or $618 /nt to $769 /nt), depending on size, shape, and thickness. The import market has been bouncing back with billet prices in Turkey and Taiwan increasing along with a rising scrap market. As prices for raw materials are showing an increase, merchant bar prices are also creeping up. Merchant bar offers from Turkey have increased approximately by $1.50 cwt. since our report two weeks ago and now range from $31.50 cwt. to $32.50 cwt. ($694 /mt to $717 /mt or $630 /nt to $650 /nt) FOB loaded-truck, US Gulf ports. Taiwanese merchant bar offerings have increased by $.50 cwt. since our last report two weeks ago, now ranging from $30.00 cwt. to $31.00 cwt. ($661 /mt to $683 /mt or $600 /nt to $620 /nt) FOB loaded-truck, at Gulf and West Coast ports. These prices may be a little high for US markets, especially since inventories are very healthy at service centers and demand is not as strong as it was second quarter. However, in the next week or two, buyers will start making new purchases for January and February arrivals and may have to accept a slight increase. Also, there are some Chinese and Brazilian merchant bars being offered at more competitive numbers. Chinese merchant bars are relatively new for the US market but their volume is expected to increase with time.