US merchant bar mills have found relative success pushing though their latest price increase, as end-users report a slight uptick in demand.
Unlike other, more sensitive long products such as rebar, the US merchant bar market has not been significantly affected by the January 10-announced $3.25 cwt ($72/mt or $65/nt) price increase, based entirely on raw material costs. SteelOrbis has learned that end-use demand for merchant bar has continued to marginally improve, making it relatively easy for domestic mills to get their full asking prices for February shipments--in the range of $44.30-$49.50 cwt. ($977-$1,091/mt or $886-$990/nt) ex-mill, depending on size and shape.
However, the trend of easy acceptance might be at its peak. SteelOrbis has learned that even though there is not much deal-making in the domestic merchant bar market at present, there is "too much water in the tank," according to one East Coast distributor, which could be a reason why domestic mills did not increase base prices along with rebar earlier this month (before scrap prices were released). Scrap prices are expected to rise again (albeit slightly) next month, and then drop slightly in March--if so, there is a growing likelihood that mills will be forced to relinquish their recent gains in merchant bar pricing. Demand, steady as it is, will simply not be enough to keep prices up.
Import activity has had some influence on this situation-although there is not much inquiry activity at the moment, SteelOrbis has learned that shipments are arriving now and in the near-term at prices that are quite attractive when compared to domestics. For example, merchant bar from Turkey has arrived at prices around $37.00 cwt. ($816/mt or $740/nt) duty-paid FOB load truck at East Coast ports. However, customers inquiring today about future shipments would likely be quoted prices at least $3.00 cwt. ($66/mt or $60/nt) higher. Elsewhere, import offers of merchant bar from Korea have been heard in the range of $42.00-$45.00 cwt. ($926-$992/mt $840-900/nt) duty-paid FOB load truck at West Coast ports.
Import shipments should continue to pick up in the next month or so, but current data reflects a slight downtrend in recent activity. According to license data from the US Import Monitoring and Analysis System (SIMA), the US imported 6,259 mt of merchant bar in December, a slight decrease from the 7,706 imported in November (census data). As of January 13, the US has only imported 2,666 mt of merchant bar, but month-ending numbers will likely exceed the previous month. While Canada and Mexico (the number one and two sources, respectively, for imported merchant bar) exported less to the US in December compared to November, tonnage levels from Turkey increased month-on-month, from 365 mt in November to 593 mt in December. So far for January, the US has only imported 87 mt, but a lot can change in a matter of weeks.
