US merchant bar market: Domestically stable

As we reported earlier this week, leading bar producer Nucor has kept transaction prices the same for April deliveries. Other merchant bar producers will almost definitely follow Nucor's lead on pricing, as they have done for the past two years. Observers note that Nucor's pricing strategy has changed over the years. Under different leadership, a smaller and younger Nucor only paid attention to its order backlog to determine pricing moves. If the plants were full, they raised prices, and if not, they dropped the prices and drove their competitors crazy in the process. They had the most modern mini mills, and the lowest steel making costs. Running the plants at full capacity was essential to their early success. They also didn't care to participate in trade actions. They just focused on running their mills at top efficiency. Now that Nucor has matured and has become the market leader for long products, they have a more complex approach to pricing. Market share has replaced order backlog in pricing concerns. Nucor has positioned itself not to lose any market share to other domestic competition or to imports. They have started paying close attention to imports, fighting them with foreign fighter programs and antidumping petitions. They were the most vocal advocate of Section 201 safeguard measures. Currently, demand and consumption levels are strong for merchant bars. Plants are running full. Most buyers were expecting a domestic price increase this week, but probably in order to protect its market share from imports, Nucor decided against it. Despite the ripe conditions for a price increase, the "stable price" policy will most likely prevail in the next couple of months, and therefore, the pricing trend remains neutral. Domestic merchant bar prices range from $27.95 cwt. to $35.95 cwt. ($616 /mt to $808 /mt or $559 /nt to $733 /nt), depending on size, shape and thickness. Normally, flat domestic pricing isn't good news for importers; however, they will most likely push for import price increases in the upcoming weeks as foreign markets are experiencing elevation of scrap and billets. Since our last report two weeks ago, import prices for Turkish merchant bars and small sections have gone up slightly, and are now being offered from $27.00 cwt. to $28.00 cwt. ($595 /mt to $617 /mt or $540 /nt to $560 /nt) FOB loaded truck in US Gulf ports. This is a $0.50 cwt. ($11 /mt or $10 /nt) increase. Turkish merchant bars find acceptance in light sizes where the domestic price is higher.