While the sideways price move for US domestic merchant bar was expected in the face of a neutral scrap move, some wonder why mills didn't push an increase, as with rebar.
For the third month in a row, the neutral shredded scrap trend has resulted in no changes in transaction prices for US domestic merchant bar. Typically, there would be nothing strange about the development, but in light of major US mills' decision to nevertheless increase October-shipment prices for rebar (by $20/nt for most products, $30/nt for 20-foot lengths), some market sources are wondering why mills didn't apply the same increase to merchant bar, which is in no less demand than rebar (decent, but not exceptionally high).
Certainly, rebar and merchant bar prices do not always trend together, yet sources tell SteelOrbis that if mills were going to try for a price increase regardless of neutral raw material prices, they might have also given merchant bar prices a boost, considering end-use sectors for the products, such as manufacturing, are still in growth-mode. In fact, despite the Institute of Supply Management's PMI decreasing by 0.3 percentage points in August (from July levels), fabricated metal products, transportation equipment and machinery all reported growth.
Nevertheless, US domestic merchant bar prices will remain in the level of $45.30-$50.50 cwt. ($999-$1,113/mt or $906-$1,010/nt) ex-mill, depending on size and shape, for October shipments. Early predictions for scrap pricing next month are pointing to a similar sideways trend, and if so, it is unlikely that mills will attempt to shake up merchant bar prices, considering they passed up an opportunity to do so this month.
As for imports, inquiry activity has been quiet, as not many US buyers want to receive material at the end of Q4. Prices, however, have increased in the last month, with Turkish merchant bar offers going up approximately $1.00 cwt. ($22/mt or $20/nt). New offers are now in the range of $45.00-$47.00 cwt. ($992-$1,036/mt or $900-$940/nt) DDP load truck at US Gulf ports, but traders tell SteelOrbis that there is very little interest, even for the specialty sizes that are most commonly brought in.
It seems as if most US merchant bar buyers have already stocked up for the fall/early winter, as August reflected a short spike in arriving merchant bar. According to the license data from US Steel Import Monitoring and Analysis System (SIMA), the US imported 8,402 mt of merchant bar in August, compared to 6,876 mt in July. Canada remained the top source of imported merchant bar to the US, with 4,805 mt arriving in August, compared to Mexico's 2,273 mt and Turkey's 1,185 mt. Import tonnages for September, on the other hand, already look grim. As of September 13, the US has only imported 1,526 mt of merchant bar, and there does not seem to be any indication that final September numbers will come close to August levels.