While US merchant bar mills managed to avoid officially announcing a price decrease earlier this month, weak demand and activity has contributed to spot prices falling further, despite the recent scrap up-tick.
With just a few weeks left until the New Year, most US service centers continue to be in a destocking mode. Therefore, mills have been forced to continue chasing after business even though scrap prices are on a fairly robust upswing.
Current published domestic merchant bar transaction prices lie within the range of $32.55 cwt. to $37.75 cwt. ($718/mt to $832/mt or $651/nt to $755/nt) ex-mill depending on size, shape and thickness; however, actual spot prices on products at the lower end of the range, most notably angles, can be found for around $30.00 cwt. ($661/mt to $600/nt) or even lower depending on the size of the order. While mills want to keep prices as firm as possible, most are content right now to keep published prices stable and offer discounts in order to book some much-needed last minute business before year-end. Some service centers may be selling at even slightly under the mill price level, which puts further pressure on producers to offer discounts.
Nevertheless, mills are hoping that scrap prices will sustain or even continue to climb through at least the first couple months of the first quarter to allow for a price increase right before seasonal construction projects get underway. Furthermore, amid continuing destocking efforts, service center inventories may be low enough by year-end to support a Q1 price increase. According to the latest Metal Service Center Institute (MSCI) shipment and inventory report, monthly structural steel inventory was at 540,000 nt in October, compared to 549,000 nt in September. This related to an estimated monthly overhang of only 2.5 months in October. However, customers on the West Coast say inventories in this region are still high when compared to those in other parts of the country and it will therefore take longer to work them down.
US mills are still free of any significant price pressure from offshore import offers; however, there still are some lower-priced offers coming from just across the border. While Mexican merchant bar offers are not booking with any regularity, their aggressiveness hasn't waned. Mexican mills have dropped their merchant bar offers by approximately $1.00 cwt. ($22 /mt or $20 /nt) since the beginning of the month, and are now offering at around $27.00 cwt. to $28.00 cwt. ($595 /mt to $617 /mt or $540 to $560 / nt) FOB delivered to the border crossing.
As mentioned, offshore merchant bar imports are basically nonexistent right now. Korean and Taiwanese offers are dry and most Turkish offers are too high to be seriously considered. Buyers may be able to book some niche sizes from Turkey, mostly delivered via container, though.
According to preliminary census data from the US Steel Import Monitoring and Analysis System (SIMA), total monthly merchant bar exports to the US decreased from 6,615 mt in September (final census data) to 4,249 mt in October. Canada and Mexico were the only sources to export over 1,000 mt to the US during October, at 1,783 mt and 1,693 respectively. The largest offshore exporter in October was Turkey, but tonnage was still well under 1,000 mt, at 381 mt.