US merchant bar market – an overview

The merchant bar market in the US has had its share of ups and downs throughout 2006. However, nothing major seems to be taking place which will affect the market in the next few months. Demand has been slowing this quarter, but the merchant bar market is still doing well. The market is reasonably strong, with commercial construction still steady and expected to remain that way for a while. Mills have been less busy than in the second quarter, however producers aren't worried and realize that this is just typical business for the fourth quarter. Service centers are maintaining appropriate levels of inventories, but are not overly full. The domestic pricing trend is flat at this time. Nucor has not raised or lowered final transaction prices in the past few months and these prices will be in effect at least throughout 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. Although prices are stable for now, the US scrap market is showing signs of weakening. Auto bundle prices have dropped within the last week and in turn scrap prices have gone down as well. With prices for raw materials falling domestically, we have to speculate how this could affect the overall market. In spite of all this, market players do not expect to see a decrease in domestic merchant bar prices in November, and even possibly not before 2007. The import market is also looking stable. Imports are readily available, but most sizes are offered at figures which are very close to the domestic prices. There has not been a whole lot of buying activity recently as part of inventory reduction programs for steel service centers. Billet prices have been very strong in Turkey, causing an increase in prices offered for merchant bar. Turkish merchant bar offers have increased by $0.50 cwt. since our last report two weeks ago, now ranging from $32.00 cwt. to $33.00 cwt. ($705 /mt to $728 /mt or $640 /nt to $660 /nt) FOB loaded-truck, US Gulf ports. Taiwanese merchant bar offers have remained the same since our last report, still in the range of $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. More offers are coming for small sections and large structurals from China and South America, which are bound to become a major source for imported merchant bars in the US.