US merchant bar market – Domestics and imports trend upward

As shredded scrap prices increased earlier this month, Nucor raised its prices for merchant bars as well. Announced to customers earlier in the month, Nucor upped merchant bar prices by $15 /nt ($0.75 cwt. or $16.53 /mt) for February shipments. When shredded scrap prices increased, Nucor followed by increasing its raw material surcharge (RMS) by $25 /nt ($1.25 cwt. or $28 /mt). However, Nucor decreased base prices by $10 /nt ($0.50 cwt. or $11 /mt), resulting in a $15 /nt ($0.75 cwt. or $16.53 /mt) increase for net transaction prices. Current domestic merchant bar prices now range from $30.35 cwt. (e.g. 2 x 2 x ¼ angles) to $38.45 cwt. ($669 /mt to $848 /mt or $607 /nt to $769 /nt), depending on size, shape, and thickness. Even though this is a wide range, most domestic merchant bar prices tend towards the lower end of the spectrum. The merchant bar market is relatively strong, and it is believed that it will maintain its strength throughout the remaining winter months and grow even more intense by springtime. Demand right now is decent. The still robust non-residential construction market has been playing a very large part in contributing to the demand for merchant bars. And although the housing market has been soft, it has been rebounding slightly lately, and this will also have a positive impact on merchant bar demand in the next few months. With the current market conditions, it is believed that domestic merchant bar prices will increase even more in the coming month, and therefore, the pricing trend is now strongly up. As for imports, prices have been increasing as well. Scrap prices have been going up worldwide and billet prices in Asia as well as in the Black Sea region have gone up significantly. Raw material price increases are forcing merchant bar producers to increase their offers as well. Turkish producers in particular are adversely affected by the skyrocketing billet prices in Turkey. Many are hesitant to offer and the few offers that are in the market have increased by $2.00 cwt. ($44 /mt or $40 /nt), with new offers ranging from $34.00 cwt. to $35.00 cwt. ($750 /mt to $772 /mt or $680 /nt to $700 /nt) FOB loaded-truck, US Gulf ports. Even though this is a big increase, Turkish merchant bars have the potential to go up further in the few weeks ahead. China, a relatively new player in the US for merchant bars, is offering their product in the range of $29.00 cwt. to $31.50 cwt. ($639 /mt to $694 /mt or $580 /nt to $630 /nt) FOB loaded-truck, at Gulf and West Coast ports. Gradually, more trading companies are discovering Chinese producers, who will soon be a very common source for merchant bars in the US market. Merchant bar offers from Taiwan have remained the same since our last report two weeks ago, but are expected to increase in the near future. Offers range from $29.50 cwt. to $30.50 cwt. ($650 /mt to $672 /mt or $590 /nt to $610 /nt) FOB loaded-truck, at Gulf and West Coast ports, but are more dominant on the West Coast. In the Gulf, Brazilian merchant bars are price leaders for medium range angle and channels. For small range angles and flat bars, there are also Argentine offers. Both sources are marketed by Arcelor-Mittal. License data collected through January 23, 2007 from the United States Import Administration shows for the month of January, worldwide merchant bar exports to the US totaled 14,568 mt with the top three exporters to the US being China at 4,737 mt, Japan at 3,982 mt, and Canada at 3,259 mt. The data is 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).