Activity in the US rebar market continues to be slow due to the continued soft demand. Meanwhile, Turkish mills are raising their export prices for rebar based on stronger demand from other markets.
In the US domestic market, most offers continue ranging from about $24.00 cwt. to $24.50 cwt. ($529 /mt to $540 /mt or $480 /nt to $490 /nt) FOB mill, or slightly less after negotiation. Little has changed from last week, when Nucor announced it would keep rebar prices stable for May orders. However, the company's announcement of keeping rebar prices stable doesn't mean that the prices will not continue to slide. In fact, despite the announcement that prices wouldn't change, buyers were already receiving lower prices, if not from Nucor, than from other competing mills. As a result, prices declined regardless.
Nevertheless, SteelOrbis did not find evidence of further domestic price declines since last week. As customer inventories continue shrinking and are nearing depletion, the market hopes for an up-tick in demand that will stop the downward trend we've seen for so long. US shredded scrap prices may have bottomed out this month, and there is a possibility that scrap prices will rise again in May. However, a rebound in US scrap prices and longs demand is unlikely to occur as fast as most would hope, and for now, poor demand persists in pressuring US rebar prices downward.
In the meantime, Turkey has been able to sustain business transactions from non-US markets, such as Egypt and the Persian Gulf, that justify their export rebar price increases. Since last week, based on the latest prices offered from Turkish mills, import offers from traders for new shipments have increased by $1.00 cwt and now range from $22.50 cwt to $23.50 cwt ($496 /mt to $518 /mt or $450 /nt to $470 /nt) duty-paid, FOB loaded truck in US Gulf ports. However, it is still unclear whether the positive trend for Turkish import rebar prices will continue as there have been no bookings from the US at these new levels.
Meanwhile, Mexican rebar offers to the US continue ranging from $22.00 cwt. to $23.00 cwt. ($485 /mt to $506 /mt or $440 /nt to $460 /nt) loaded truck in Houston. Nevertheless, while the Mexican rebar demand remains fairly good, prices in the Mexican domestic market dropped by about 1,400 pesos over the last couple weeks due to the strengthening of their currency against the US dollar, which is now being exchanged at 13.01 pesos for US$1. This strengthening was boosted by hopes that the US economy is stabilizing and by Mexico's recent decision to secure nearly $80 billion in international credit lines. Still, due to the effects of the global recession and lack of demand from the US, Mexican imports are still generally following the US trend downwards.
The economic news indicating a bottoming out throughout the various industrial sectors continues as the Federal Reserve announced Wednesday that the US contraction slowed across several of the biggest regional economies last month, with some industries stabilizing at a low level. However, output at factories, mines, and utilities dropped once again in March, by 1.5 percent, matching the prior month's decrease. The amount of industrial capacity being utilized also further dropped to 69.3 percent, which is the lowest level since records began in 1967. Furthermore, the outlook for the construction sector, the main consumer of US rebar, remains soft.