The US rebar market has remained stable for another week despite the economic conditions. But while domestic prices have not decreased considerably in over a month, the lack of demand continues to put a damper on both sales and production.
US rebar offers continue to range from about $24.00 cwt. to $24.50 cwt. ($529 /mt to $540 /mt or $480 /nt to $490 /nt) FOB mill. Various fabricators tell SteelOrbis their inventories have reached low levels, yet the poor market conditions are keeping them from returning to the market. As a result, producers fear increasing their output as there have not been signs of an improving demand.
Although US rebar domestic prices have not been decreasing in recent weeks, market conditions continue to exert downward pressure on the market. However, the demand probably will not get much worse than it is at present, and with a modest scrap price increase expected for May, it is unlikely that US rebar prices will see any more large drops going forward. The more likely scenario is that the mills will continue to match each other’s competitive prices on a case-by-case basis and continue to protect their market share without declaring a general price decrease. Still, although no price decrease announcement is expected in May, the market price should soften slightly due to competition amongst domestic mills.
On the international front, Turkish longs mills have yet to see a strong resurgence of demand to match their recent price increases. Nevertheless, Turkish mills claim they are full through June and have not backed down from their offering levels. Going forward, however, if they do not start to get any orders from the US, they may have to lower their prices. For now, import rebar offers from Turkey to the US remain the same after their $1.00 cwt. increase last week, ranging from about $23.50 cwt to $24.50 cwt ($518 /mt to $540 /mt or $470 /nt to $490 /nt) duty-paid, FOB loaded truck in US Gulf ports. The Turkish import trend is currently sideways as no real demand has emerged to justify further increases.
Meanwhile, Mexican rebar offers for the US have also remained stable since last week, although the general pricing trend for import rebar from Mexico is slightly down, similar to that of US domestic rebar. After last week’s $0.50 cwt. price drop, competitive rebar offers out of Mexico have remained unchanged. Offers remain at around $21.50 cwt. to $22.50 cwt. ($474 /mt to $496 /mt or $430 /nt to $450 /nt) loaded truck in Houston. Mexican rebar is also offered to Florida and to the US East Coast but the domestic mills are trying to protect their turf by matching those competitive offers.
For now, there is only one Mexican producer active in the US, and the Mexican market has generally seen decent domestic demand in recent weeks despite the lackluster US demand. However, the swine flu affecting the country is also impacting its economy; the peso’s value fell more than 3 percent on Monday and Mexico's stock market fell 4.1 percent on concerns that the virus fears would send the economy further into recession. Until now, Mexican market was seen as more resilient to global the global financial crisis than its northern neighbor but the recent flu outbreak may change that. These concerns are legitimate as in 2003, the outbreak of the SARS respiratory virus in Southeast Asia cost the region's economy around 0.6 percent of its GDP.
US rebar customers continue to abstain from buying import rebar for the most part as the weak demand conditions continue to favor local trade. SteelOrbis could not confirm any pending rebar shipments to the Gulf from Turkey, Japan or Taiwan – or, in other words, any of the US' major import rebar sources. The import pipeline is eerily empty. Traders have liquidated most of the unsold inventories in Houston, although some unsold inventories remain on the West Coast.
According to the import administration of the US Department of Commerce, Mexican import rebar licenses from April 1 through April 28 totaled 10,480 mt, compared to final census data from April 2008 which showed 31,286 mt. Turkish rebar import licenses for the same period of April totaled only 5,684 mt while final data from last April showed a total of 90,460 mt.