US domestic rebar and wire rod prices rose this week after domestic mills announced price increases in reaction to rising January scrap prices, long steel market insiders told SteelOrbis this week.
Market contacts said Nucor announced January 10 that it would increase its rebar prices by $30/nt ($33/mt), or $1.50/cwt. as a result of rising January scrap values. It remains to be seen whether these price increases are accepted by the market as domestic finished steel demand remains muted. Following the Nucor announcement, other steel producers, namely Commercial Metals Company (CMC) and DeAcero, followed suit with similar price increase announcements.
Most market contacts agreed that rising January scrap values contributed to the increase in rebar prices. January scrap across all Midwest grades is reported up $20/gt ($20/mt) on a combination of dwindling supply at collection facilities and cold weather, while US East Coast scrap was reported steady to December values on more limited January export opportunities. The ongoing outage of Liberty Steel’s wire and rod facility in Illinois also is expected to keep markets tight through its anticipated return in March.
Whether the current mill price increases stick remains largely to be seen, contacts said, as finished steel demand remains little changed from December. Prior to the recent mill announcements, contacts expected steel prices to largely remain flat in January with prices expected to rise further into the first quarter.
“Since scrap has gone up, there will be pressure to increase prices moving forward,” one long steel market insider told SteelOrbis. “However, the market still appears somewhat soft, so it is still a bit early for mills to increase prices by very much.”
Pressure from incoming rebar imports, competition from other domestic mills, as well as material already priced on the ground was mentioned as limiting the extent of weekly price increases, insiders said.
“Given current demand, most people really don’t need to rush out to buy steel at this point, so mills may not be fully successful in raising their prices,” he said.
“I guess the price increases were the result of higher scrap prices,” said another East Coast rebar insider. “I’m not so sure that the price increases will stick because one mill has yet to announce an increase, and that’s a little confusing.”
In the weekly rebar spot markets, domestic supply on an FOB mill basis is assessed with most transactions noted in a $36.50-38.00/cwt. range, ($730-760/nt or $805-838/mt), on average $37.25/cwt. ($745/nt or $821/mt), up from $36.00-$37.00/cwt. ($720-740/nt or $794-816/mt), on average $36.50/cwt. ($730/nt or $805/mt) seven days ago.
In the wire rod markets, supply is expected to remain under pressure near term as steelmaker Nucor recently announced it would cease production of wire rod at its Connecticut-based steel mill, shifting production to other US Southeast mills, the steelmaker said.
In the weekly markets, following early reports of transactions at $39.00-41.00/cwt. ($780-820/nt or $859-904/mt), or an average of $39.50/cwt. ($800/nt or $881.85/mt), later trades were noted January 15 sharply higher at $44.00/cwt., following another $30/nt price increase announcement from Nucor on January 14.
“Engineered and building mesh products are up $30-50/nt ($1.50-$2.50/cwt.) most likely due to the ongoing Liberty Steel outage,” said one wire rod insider, reacting to the Nucor announcement and ongoing supply issues.
“Prices are up this week mostly because of higher scrap, but another consideration is Trump coming into office which could further trim imports,” another long steel insider told SteelOrbis about the current competitive pricing situation.