US rebar market continues to stagnate

US rebar offers have remained steady since last week despite domestic mills' attempt to raise prices by $20 /nt ($22 /mt or $1.00 cwt.). However, as Mexican imports are becoming scarcer, and Turkish imports still out of the market, there is a good chance that domestic offers will firm up slightly going into June.

For now, domestic rebar offers continue to range from $24.00 cwt. to $24.50 cwt. ($529 /mt to $540 /mt or $480 /nt to $490 /nt) ex-mill. Nevertheless, the pricing trend for domestic rebar is slightly up, as mills will make an effort to push prices up considering the reduced import activity, particularly from Mexico. The positive trend does not indicate an improvement in the demand, however, as consumption is still weak. Furthermore, US  scrap prices may register a modest decline next month. So, while the market seems to have hit the bottom, a fast recuperation is not expected.

Meanwhile, the US' neighbors to the south seem to have improved their sales in their local markets and several sources have mentioned that Mexican mills are booked through June. Therefore, there are very few offers for the US, and they are not particularly competitive. Nonetheless, Mexican mills' attempted price increase of $2.00 cwt ($44 /mt or $40 /nt) earlier this month has not been entirely accepted, and most transactions are still taking place in the range of $23.50 cwt. to $24.00 cwt. ($518 /mt to $529 /mt or $470 /nt to $480 /nt) delivered to Houston.

In contrast to US and Mexican rebar prices, Turkish import rebar offers for the US are now trending slightly down, dropping  by $0.50 cwt. ($11 /mt or $10 /nt) since last week, with most offers now ranging from about $23.00 cwt to $24.00 cwt ($507/ mt to $529/ mt or $460 /nt to $480 /nt) duty-paid, FOB loaded truck in US Gulf ports. Turkish import prices now face downward price pressure as Turkish mills are experiencing a decreasing export demand from their main markets and are seeing raw material prices decrease as well. Still, it is not expected that Turkish mills will drop their prices low enough to be competitive in the US market and therefore, a reemergence of Turkish imports in the US market is not expected.

The lowest prices in the US market are seen on the distributor level while there is still a lot of blood-letting going on as companies try to turn inventory into cash. Some transactions are still taking place at below $23.00 cwt. ($506 /mt or $460 /nt) in Houston.

According data from the Import Administration of the US Department of Commerce, rebar imports from Mexico increased from 14,402 mt in April (based on preliminary census data), to 18,405 mt as of May 27, 2009 (based on license data). Still, these figures are down significantly from the 31,286 mt imported in April of last year and 40,136 mt imported in May 2008. The US' second largest typical import rebar source, Turkey, exported only 5,684 mt to the US  in April (from 90,460 mt in April 2008) and 15,149 mt as of May 27 (based on licenses, compared to 4,976 mt in May of 2008).