US rebar market – Distributors anxious to move tonnage before year-end

The strength in the domestic rebar market is slowly disappearing, and the domestic pricing trend is now neutral, at best. Mills are asking customers to pick up their shipments quickly as they are building floor inventory and want liquidity. This is a sign of a weaker market, since in a stronger market, purchasers don't need to be prompted to pick up their shipments right away. In October, domestic producers will have to react to falling import prices and current scrap prices, but the ultimate factor that will determine the market trend is demand. October prices are unlikely to go up, but since it looks like scrap prices may rise some (based on higher auto bundle sales this month), the domestic producers may increase their raw materials surcharge while lowering the base price, keeping prices steady. Then again, domestic producers could decide to lower prices slightly in reaction to softening demand and falling import prices. If not a general price decrease, the domestic producers may chose to introduce the “foreign fighter” discounts again, which used to be up to $40 /nt ($44 /mt or $2.00 cwt.) for 20' (6.01 meters) long rebars. But for September, domestic rebar prices still range from $27.90 cwt. to $28.40 cwt. ($615 /mt to $626 /mt or $558 /nt to $568 /nt) ex mill. Usual price extras apply for smaller sizes and grade 60. The import pricing trend is still slightly down, and import rebar offering prices have fallen by $0.50 cwt. ($11 /mt or $10 /nt) since last week, now ranging from $26.00 cwt. to $27.00 cwt. ($573 /mt to $595 /mt or $520 /nt to $540 /nt) FOB loaded truck, in US Gulf ports. To the contrary of local import offers by traders, in Asia and Turkey, major rebar exporting regions, scrap and billet prices are going up, and mills would like to sell their rebar here at a higher price than what they are getting. However, since the rebar inventories in the US are high, these exporting countries are not able to raise prices right away. Whether or not these import mills will eventually be able to raise their export prices to the US depends on the US economy through fourth quarter, as well as the severity of the coming winter. For both import and domestic rebar, local distributors have been dropping their prices to customers in order to reduce their rebar stocks quickly. For some distributors, it's time to liquate inventory, even if the current sales are below the replacement cost. It is anticipated that this phenomenon will continue through the end of the year, especially in Houston where distributors will have to pay hefty year-end taxes on their remaining inventories.