US rebar prices, both import and domestic, have drifted downward since last week. Nucor came out with an official rebar price decrease of $25 /nt ($28 /mt or $1.25 cwt.) late last week, which did not come as much of a shock as it brought published prices to a level that more realistically reflected the deals that were happening on the ground level.
Prior to this latest announcement, Nucor announced last month that it would keep its prices stable. However, SteelOrbis reduced its assessment of domestic prices at that time based on a number of private deals that were conducted at below the list level. Last week's announcement finally brought list prices closer to the actual spot prices. Domestic offers now range from $25.00 cwt. to $25.50 cwt. ($551 /mt to $562 /mt or $500 /nt to $510 /nt) FOB mill, which is down an average of $0.50 cwt. ($11 /mt or $10 /nt) from our last report from a week ago. Domestic prices are projected to continue trending downward as demand continues to be weak and scrap prices are also expected to soften further going forward.
Many rebar companies are hopeful that Obama's economic stimulus package will increase their business; however, it probably will not start to show any effects until at least five to six months from now. In the international markets, some mills may have jumped the gun and increased their capacities too soon in anticipation of an increase in demand coming from their country's own stimulus spending packages. Perhaps that is the reason why the steel prices in China have been retracting after a promising December and January. Such preemptive capacity increases could create a second wave of high inventories, pushing down global rebar prices once more due to over-production.
US imports also have experienced a drop in prices since last week and continue trending down. After remaining fairly stable for the past few weeks, Mexican offers finally decreased by $1.00 cwt ($22 /mt or $20 /nt) from last week. Offers now range from $23.50 cwt to $24.50 cwt ($540 /mt to $562 /mt or $490 /nt to $510 /nt) loaded truck in Houston.
Meanwhile, Turkish offers have fallen by another $0.50 cwt. since last week and now range from approximately $22.00 cwt to $23.00 cwt ($485 /mt to $507 /mt or $440 /nt to $460 /nt) duty-paid, FOB loaded truck in US Gulf ports.
According to license data from the US DOC's Steel Import Monitoring and Analysis System, Turkey continues to be the US' most dominant source of import rebar. Rebar imports totaled 57,463 mt in February, led by Turkey, at 34,975 mt, followed by Mexico (20,764 mt), and Taiwan (1,678 mt). It looks like Turkish rebar imports will increase even further in March - license data as of March 17 show 53,485 mt from Turkey (and only 5,565 mt from Mexico).
On the economic side, several rather positive indicators for the month of February show that conditions might be starting to slowly recuperate. The most relevant economic indicator for the rebar market is housing starts, which, though still down 47 percent compared to last year, increased 22 percent in February from January. Furthermore, the Commerce Department said retail sales fell by only 0.1 percent month-over-month in February while economists had estimated a 0.5 percent decline. Sales, excluding autos, rose 0.7 percent while they were expected to drop 0.1 percent.