As previously announced by Nucor Bar Mill Group, domestic merchant bar transaction prices have slipped $1.25 cwt. ($27.56 /mt or $25 /nt) effective for shipments beginning April 12, 2007.
Currently, merchant bar prices range from $33.35 cwt. (e.g. 2 x 2 x ¼ angles) to $41.05 cwt. ($735 /mt to $905 /mt or $667 /nt to $821 /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.
Market insiders were surprised upon hearing that Nucor dropped prices for May. Before the announcement, most buyers were predicting that prices would remain stable despite the scrap decrease. Lack of demand may be one of the reasons for this slight price decrease. While stellar demand for wide flange beams allowed transaction prices to hold steady, the merchant bar market may be struggling some. Demand is decently strong, especially for structural sizes, but possibly not strong enough to withstand a $40 /long ton shredded scrap decrease.
Another reason why Nucor dropped their prices for May could be the import offers that have been floating around in the market. Less than a year ago, many Chinese mills did not have a program to export to the US because of the extensive tooling required of many ASTM sizes of merchant bars for the US. Now, however, China is becoming a major importer in the US merchant bar market, offering some of the major sizes that US mills love to produce, and is shipping them to the West and Gulf Coast for lower prices. As a strategy to ensure competitiveness, Nucor may have lowered prices to stay ahead of China and maintain their customer base.
It's hard to say where the market will go from here. Domestic prices will stay at this level throughout May. For June, it really depends where the scrap markets go, considering that the current state of the market is more raw material-driven, rather than demand-driven. If shredded scrap prices fluctuate a minimal amount in either direction, market sources believe that merchant bar prices will remain neutral. If there is another significant drop in scrap prices, merchant bar prices may follow to some degree. Shredded scrap prices are trending down currently.
On the import side, merchant bar prices have reached their peak. After many months of rising billet prices in Asia and the Mediterranean, things have finally calmed down. Both scrap and billet prices have peaked and are now softening in those regions, keeping prices for merchant bars flat. Billet prices are expected to soften some more in the upcoming weeks, which may drive the pricing trend for merchant bars down some in a month or two. For now, the import pricing trend is neutral, and prices have not changed since our report two weeks ago.
Current merchant bar offers from China are still in the range of $32.50 cwt. to $34.00 cwt. ($717 /mt to $750 /mt or $650 /nt to $680 /nt) FOB loaded-truck, at Gulf and West Coast ports.
Taiwanese offerings are in the range of $33.00 cwt. to $34.00 cwt. ($728 /mt to $750 /mt or $660 /nt to $680 /nt) FOB loaded-truck, at Gulf and West Coast ports, though they are more dominant on the West Coast.
Merchant bar offerings from Turkey are ranging from $38.00 cwt. to $39.00 cwt. ($838 /mt to $860 /mt or $760 /nt to $780 /nt) FOB loaded-truck, US Gulf ports.