Domestic US merchant bar spot prices declined again over the past couple weeks, despite the recent shredded scrap price uptick.
Domestic US merchant bar spot prices have declined by an average of $2.00 cwt. ($44 /mt or $40 /nt) over the past couple weeks, and while official listed domestic merchant bar prices continue to range from about $33.05 cwt. to $38.25 cwt. ($729 /mt to $843 /mt or $661 /nt to $765 /nt) ex-mill depending on size, shape and thickness, SteelOrbis has learned that certain products can now be found for as low as $26.00 cwt. ($573 /mt or $520 /nt) on orders of significant tonnage.
Nonetheless, domestic merchant bar mills are finding themselves in a precarious situation because the significant price gap between spot and listed prices would ordinarily signify an obvious price decrease to help clean up the marketplace disparity between official and spot prices; however, the recent shredded scrap price uptick will most likely result in a scrap surcharge increase of $43 /nt ($47/mt or $2.15 cwt.) this month. While no one really expects domestic mills to attempt a merchant bar price increase, a decrease may be as unlikely due to the increasing surcharge.
Regardless, many distributors are not too concerned with "official" pricing right now due to the prolonged slump in demand. According to the latest Metal Service Center Institute (MSCI)'s shipment and inventory report, the average inventory overhang for steel bars in March was estimated at 3.7 months, suggesting that regardless of official prices right now, buyers will most likely have the ability to negotiate current orders somewhere in the $20s cwt.
Meanwhile, on the import side, buyers continue to have little interest in foreign products mostly due to extended lead times in a market when no one is really sure of what to expect a couple months down the road. As a result, combined with the fact that many overseas domestic markets have been faring better than the US domestic market recently, foreign mills are becoming less willing to chase down domestic US spot prices.
While Mexico remains the most competitive foreign source offering merchant bars to the US, most offers trended neutral over the past couple weeks and can be found for around $26.00 cwt. ($573 /mt or $520 /nt) delivered to California and Texas, depending on order specifics.
Meanwhile, most Turkish merchant bar offers also remained unchanged over the past couple weeks, at around $31.00 cwt. ($683 /mt or $620 /nt) duty-paid, FOB loaded truck in US Gulf ports; however, even if buyers are still interested in the Turkish product, Traders have said that vessels are difficult to come by unless for container shipping here and there. Nonetheless, most traders have expressed that there is virtually zero Turkish merchant bar interest right now.
License Data from the US Steel Import Monitoring and Analysis System (SIMA) show that total merchant bar imports decreased slightly in April from March, at 5,281 mt and 5,596 mt respectively; however, that merchant bar imports are down drastically from the 13,605 mt imported in April 2008. The reported 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).