Both US domestic and import rebar prices have slipped further in the last week and, with scrap prices taking a tumble this month, it looks like more decreases are on the way.
Most domestic rebar offers now range from approximately $43.00 cwt. to $45.00 cwt. ($948 /mt to $992 /mt or $860 /nt to $900 /nt) ex-mill. These spot prices have dropped by as much as $3.00 cwt. ($66 /mt or $60 /nt) in the last week due to the deep discounting mills are having to offer in order to get any business at all.
Even with mills being very negotiable with their pricing, there is very little buying interest. Some distributors say that they are still trying to get rid of material they purchased back when prices were $10.00 cwt. ($220 /mt or $200 /nt) higher, and those who are low on stocks are replacing them only on an as-needed basis since they expect prices to fall further. The weak rebar demand is not helped by the fact that scrap prices have dropped, making it all but inevitable that rebar prices will come down as well.
Nucor's raw materials surcharge (RMS), which tracks shredded scrap prices, will decrease by approximately $120 /nt ($132 /mt or $6.00 cwt.) to reflect the October scrap prices, and some buyers speculate that Nucor and other domestic rebar mills may reduce their transaction prices by the full amount of the RMS decrease.
Others speculate that the mills will take the edge off the RMS decrease by raising base prices by $2.00 cwt. ($44 /mt or $40 /nt) or so, making for a $4.00 cwt. ($88 /mt or $80 /nt) decrease from current price levels. Either way, a significant price decrease is in store, as customers will expect mill pricing to reflect the large decrease in scrap costs, and the mills will need to compete with the much-cheaper import offers for the little business that is available.
On the import side, spot offers have slipped by as much as $6.00 cwt. in the last week to a level of $36.00 cwt. to $38.00 cwt. ($794 /mt to $838 /mt or $720 /nt to $760) duty-paid, FOB loaded truck, in US Gulf ports. Turkey, Spain, and Mexico are the main sources that are currently offering, and new offers from Mexican mills also range from $36.00 cwt. to $38.00 cwt. delivered to Houston.
There is very little back-to-back business going on in this risky market, as offering prices from Turkey and Mexico continue to get lower and lower, and traders would rather wait to buy until the market bottoms out. For now, the pricing trend is still strongly down.
Mexican mills in particular continue to drag down the spot price and threaten the US domestic market with their cheap offers and quick deliveries, as their home market is even worse than the US market. Prices are reportedly extremely negotiable, as the mills grow increasingly desperate for orders. Some traders say that some of the Mexican mills would probably even be willing to do deals at any number above $30.00 cwt. ($661 /mt or $600 nt) -- though there have been no confirmed offers at this low of a price.