Despite higher asking prices from foreign mills, import rebar spot prices in the US have yet to rise due to excessive inventory from distributors and slow end-use demand.
Most import spot prices continue to range from $27.00 cwt. to $28.00 cwt. ($595 /mt to $617 /mt or $540 /nt to $560 /nt) FOB loaded truck in US Gulf ports; however, some distributors are offering lower than this range in order to get their inventories as low as possible by the end of the year.
With indications in recent weeks that the import rebar market is finally bottoming out, buyers have shown some interest at the rock bottom prices, but most don't want to pull the trigger and make a purchase just yet. Slow end-use demand and economic uncertainty continue to plague the market. Projects that have already started continue but developers are extremely hesitant to start new projects. The developers' ability to borrow money doesn't seem to be a major problem, but the uncertainty surrounding the economy has all but eliminated the appetite for risky endeavors.
In addition to rebar demand woes, there are still a lot of tons on the ground, which is preventing spot prices from rising despite the higher asking prices for new import orders.
The US' next-door neighbor, Mexico, continues to offer to the US closer to the US domestic range, at $30.00 cwt. to $31.00 cwt. ($661 /mt to $683 /mt or $600 /nt to $620 /nt) at the border, and delivered to an inland destination for some large buyers, for January shipments. Mexican mills have closed their books for December and are pushing prices up for January deliveries; however, they are not getting any major orders at the new price levels yet.
After Nucor's most recent price decrease, domestic mills in the US are offering at approximately $30.75 cwt. to $31.25 cwt. ($678 /mt to $689 /mt or $615 /mt to $625 /mt) ex-mill. However, large buyers say that they can get prices at slightly below that range for significant orders. Most domestic mills' order books are closed for '08 - not because they are full, but because most of them have cut output to varying degrees, idling their production through the holiday season, and some into January 2009.
At the same time, domestic mills are reportedly encouraged by the increase in import mills' asking prices. Also, US scrap prices seem to have stopped falling and are expected to possibly start trending up slightly again in December. So, it seems that, if the US rebar market hasn't hit the bottom yet, the bottom is definitely close.
One large rebar buyer told SteelOrbis this week that he does not expect that the domestic mill price will go lower than $30.00 cwt and that, once the current excess inventories run out, mills will start to raise their prices again, in $0.25 cwt. to $0.50 cwt. increments. Then again, others say that import prices probably have more room to fall, which would not bode well for the domestic industry. For now, the domestic pricing trend is neutral.
Final census data from the US Department of Commerce for rebar imports in September do show an encouraging trend though - Import rebar tons totaled 52,870, down from the 75,503 mt imported in August. This number is also significantly down compared to the 114,663 mt of rebar imported in September 2007. October census data is not out yet, but license data show another steep drop in rebar imports, with a total of only 33,343 mt, the lowest monthly level in over two years.
Looking at the September 2008 census data, the US' largest import rebar sources remain Turkey (18,970 mt), Japan (15,237 mt), and Mexico (14,069 mt). Other sources include Dominican Republic (4,220 mt), and Germany (240.7 mt).