Market players are predicting stability for the US domestic merchant bar market in October. Though scrap prices are heading upwards, sources say that merchant bar prices will remain flat for another month.
The shredded scrap market is strengthening with prices up approximately $15 /long ton to $20 /long ton for September shipments. After a few months of US mills keeping merchant bar prices stable, some feel maybe with this added raw material cost it is time to raise prices slightly; however, the majority of sources predict prices will remain stable for yet another month because the market is still too soft to handle a price increase.
Though the merchant bar market is stronger than the wire rod and rebar markets currently, it is still pretty sluggish overall. The housing construction market has continued to be a disappointment, weakening the demand for smaller sized merchant bars. Non-residential construction has been slowing down some, causing demand for larger sizes to soften as well.
Throughout the month of September, domestic merchant bar prices will continue to range from $33.35 cwt. to $41.05 cwt. ($735 /mt to $905 /mt or $667 /nt to $821 /nt), depending on size, shape and thickness. The domestic pricing trend is flat as prices are expected to remain in this range for October.
With the current demand situation in the US, imports have been on the slow side. Turkish offers have remained the same since our last report of two weeks ago; however, there are not many takers as offers are high.
Turkish offers are in the range of $36.00 cwt. to $37.00 cwt. ($794 /mt to $816 /mt or $720 /nt to $740 /nt) FOB loaded-truck, US Gulf ports. The market for merchant bars in Turkey is relatively stable, and prices should remain flat for a little while.
Taiwanese offers have also remained the same since our last report of two weeks ago, still ranging from $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. Billet prices in this region are stable, and this will most likely keep merchant bar numbers flat for a little while.
Chinese offers are basically off the charts with no one in the US buying. Numbers have continually increased since the Chinese government implemented the export tax on merchant bars. These prices may continue to increase further due to raw material costs; however, with offers higher than the current domestic price, there will be no takers.
Data from the US Import Administration show that worldwide exports to the US for light sections totaled 23,057 mt in July and only 14,386 mt in August. The major exporters to the US in August were Canada with 5,689 mt, Brazil with 4,928 mt, and Mexico with 2,798 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).