A late night email addressed from Nucor arrived in domestic buyers' inboxes Wednesday evening, stating that prices for merchant bar, structurals, and rebar will be climbing up for January shipments.
Nucor announced to customers that merchant bar prices for January shipments will be increasing by $25 /nt ($1.25 cwt. or $27.56 /mt). The company's raw materials surcharge (RMS) will be $153 /nt ($7.65 cwt. or $169 /mt), an increase of $35 /nt ($1.75 cwt. or $39 /mt) from the December RMS. Additionally, the company is decreasing its base prices by $10 /nt ($0.50 cwt. or $11 /mt). The net result will be a $25 /nt ($1.25 cwt. or $27.56 /mt) increase in transaction prices for January shipments.
This news did not come as a shock to most US buyers as they anticipated a decent jump in prices to kick off the New Year. With shredded scrap prices increasing by $35 /long ton earlier in the month, import competition remaining weak, and demand holding relatively steady, the move made sense.
Domestic prices for January will be ranging from $35.10 cwt. to $42.80 cwt. ($773 /mt to $943 /mt or $702 /nt to $856 /nt), depending on size, shape and thickness.
Before this increase was officially announced, many buyers commented that they felt Nucor would push prices up to reflect the full raw materials increase. Although this was not the case, it is something to consider for the months ahead. Scrap prices are supposed to keep climbing in the first month of the New Year. If raw material prices continue to rise and the other factors remain the same, it's a pretty good bet that Nucor will up prices again for February shipments.
Looking ahead, demand probably will not change too drastically any time soon for the good or the bad. The winter months are just starting to get more serious and with bad weather throughout most of the country, it is doubtful that there will be a significant up-tick in demand in the next few months. However, there are not any signs pointing to demand necessarily weakening either.
Imports to the US have died down quite a bit recently since China is out of the US market for merchant bars. Chinese prices are continually climbing up and mills are not even offering, knowing that their prices are well above the domestic price range. Also, rumors are still circulating about the Chinese export tax increase, and if it becomes a reality, China will be pushed even further out of the US market.
Offers from Taiwan are still circulating, but there are not many takers. Offers are ranging from $36.50 cwt. to $37.50 cwt. ($805 /mt to $828 /mt or $730 /nt to $750 /nt) duty paid, ex-dock at West Coast ports. With more domestic prices in the pipeline, buyers may be interested in renewing Taiwanese orders.
Turkish offers are ranging from $38.50 cwt. to $39.50 cwt. ($849 /mt to $871 /mt or $770 /nt to $790 /nt) FOB loaded-truck, US Gulf ports. These offers are for late first quarter arrivals, though some are being withdrawn completely due to the lack of ships.
Data from the US Import Administration show worldwide light bar exports to the US totaled 20,806 mt in November with the top five exporters to the US being Canada with 8,008 mt, Mexico with 5,102 mt, Peru with 3,272 mt, Japan with 3,018 mt, and Taiwan trailing with 373 mt. The data are for light sections of carbon and alloy steel, U, I, L, T and H shapes of 3" or smaller (does not include rounds, squares, or flats).