US rebar market – Inventory levels still problematic

Import rebar prices haven't changed since last week, but experts say we may soon see prices dip below $25.00 cwt. The situation on the ground is turning ugly, with distributors fighting for every order, even for deals priced below their replacements cost. Mexican offers are also getting increasingly more aggressive, and we will soon also see even lower offering numbers from Turkish and Asian mills, since their home markets are now starting to slow down. Turkey has not done much rod business with the US in the past two months, as it has been relying on its strong home market and the Middle Eastern market. Also, due to the significant price difference between Chinese and Turkish rebars, Middle Eastern buyers started to book Chinese shipments, further taking away market share from Turkish suppliers. Now that their main markets are starting to deteriorate, Turkish producers will soon become desperate to sell to the US again, and will have to lower their prices in order to do so. For now, most import rebar offers range from $25.50 cwt. to $26.50 cwt. ($562 /mt to $584 /mt or $510 /nt to $530 /nt) FOB loaded truck, in US Gulf ports. On the whole, import rebar prices have decreased by $10 /nt ($11 /mt or $0.50 cwt.) from last month's levels. Preliminary Census data from the US steel import monitor shows that the following countries exported the highest tonnages of rebar to the US in the month of September, 2006: Turkey at 175,240 mt, Taiwan at 48,206 mt, Dominican Republic (mostly to Puerto Rico) at 13,913 mt, Hong Kong at 12,750 mt, and Thailand at 10,079 mt. The total amount of rebar exported to the US in September was 287,455 mt - the highest monthly import tonnage figure of the year. These import orders, many of which arrived late, are largely responsible for the glut of distributors' unsold inventories. Domestic rebar offers still range from $26.65 cwt. to $27.15 cwt. ($588 /mt to to $599 /mt or $533 /nt to $543 /nt) ex-mill. The usual price extras apply for smaller sizes and grade 60. Domestic prices will probably remain at this range until at least December, as there has been no further downward movement in the scrap market. Also, demand is still decent and fabricators are still busy. However, mostly for seasonal reasons, straight length rebar sales are down. Distributors are competing fiercely in order to liquidate their bloated inventories - the main problem in the US rebar market. This process will take a while, and prices will remain soft for another few months before they start to go up again. For now, the pricing trend for domestic and import rebars remains slightly down.