US rebar market – Nucor surprises by keeping prices flat

US rebar market – Nucor surprises by keeping prices flat

In a surprising announcement this week, Nucor kept the effective prices for March rebar orders the same by lowering base prices by the same amount the Raw Materials Surcharge (RMS)was increased: $25 /nt ($28 /mt or $1.25 cwt.). This move came despite good consumption levels and full order backlogs. With their price-stabilizing strategy, Nucor is hoping to keep imports in check and not let the price gap widen. This may become a long-term strategy for Nucor, and upcoming months may also bring no price increase despite strong business conditions. For this reason, we deem the domestic pricing trend for rebar neutral. Nucor is the dominant rebar mill and dictates the market prices. Other rebar producers, particularly Ameristeel and SMI, will follow Nucor’s lead. Domestic offers still range from $24.25 cwt. to $25.25 cwt. ($535 /mt to $557 /mt or $485 /nt to $505 /nt) FOB mill. Extras change from one domestic producer to another and vary depending on bar size, grade, and length. The smallest rebar size, #3 (9.5 mm) fetches the highest extra. On the other hand, the import market for rebar has strengthened further since last week, with offers now ranging from $22.50 cwt. to $23.50 cwt. ($496 /mt to $518 /mt or $450 /nt to $470 /nt) FOB US Gulf ports, a $0.50 cwt. ($11 /mt or $10 /nt) price increase since last week. Most of these import offers are coming from Turkey, as their mills are the only ones offering competitive prices with significant capacity to export. Even so, some Turkish mills are hesitant to extend offers until they see how far scrap prices will continue on their upward climb. Hesitance to sell in combination with the harsh winter conditions in that part of the world is putting a lot of pressure on the supply and demand situation, pushing prices up further. Still, the latest domestic pricing news should put some damper on Turkish hopes that they will be able to get much higher prices from the US customers with a domestic price increase. Statistics confirm Turkey’s dominance in import rebar market. Preliminary license data from US government import statistics shows that the top five exporters of rebar to the US in the month of January 2006 were: Turkey, who exported 38'795 mt of rebar to the US; Bulgaria, with 26'647 mt; Japan, with 21'600 mt; Mexico, with 18'327 mt; and Taiwan, with 17'630 mt.