An August increase for US domestic rebar prices is looking very probable, as domestic prices are still significantly below the import price level.
Even after the latest price increase for July, the pricing trend for domestic rebar is still strongly up since the domestic price level still has a long way to catch up with not only the new import offer levels from foreign mills, but also with the numbers at which distributors and traders are selling their import inventories. In addition, shredded scrap prices in the US are expected to recover somewhat in July, which should give the domestic mills a strong incentive to implement a moderate price hike for August. For now, most domestic rebar offers still range from approximately $49.00 cwt. to $49.50 cwt. ($1,080 /mt to $1,091 /mt or $980 /nt to $990 /nt) ex-mill for July shipments.
On the import side of the market, Mexican and Japanese rebars are still the only import orders being booked, and the booking prices continue to rise. Mexican offers have risen to a range of $54.00 cwt. to $55.00 cwt. ($1,191 /mt to $1,213 /mt or $1,080 /nt to $1,100 /nt) delivered to the Gulf, while it is heard that recent Japanese fixtures have been made at slightly higher numbers, not to mention the significant ocean freight cost. Needless to say, with the giant gap between the Turkish price and the accepted market price level in the US, there are still no new bookings from Turkey.
Meanwhile, traders have raised their selling prices by about $2.00 cwt. ($44 /mt or $40 /nt) in the last week to a new range of $52.00 cwt. to $54.00 cwt. ($1,146 /mt to $1,191 /mt or $1,040 /nt to $1,080 /nt) FOB loaded truck in US Gulf ports, and are awaiting Nucor's next price announcement so that they can raise their numbers even higher.
Distributors and traders say that while end-use demand is not great in all regions, with the lack of imports, inventories continue to tighten, especially for rarer sizes. There are not very many unsold tons on the ground, and distributors' inventories are dwindling. It is also reported that an unusual situation is occurring in which distributors are selling to traders. Distributors are not able to hold on to inventories for very long anymore because of credit issues, so they are willing to sell tons at a discount now rather than wait a couple of months to sell them at a higher price. This normally only happens during a soft market, but with the softening economy, tight credit markets and rising prices, any steel market player will tell you: the old rules have changed.