US rebar market – Prices approaching all-time highs

Since last week, offering prices for import rebar have improved by $0.25 cwt. ($5.50 /mt or $5 /nt), now ranging from $25.25 cwt. to $26.25 cwt. ($557 /mt to $579 /mt or $505 /nt to $525 /nt) FOB, loaded truck, in US Gulf ports. The pricing trend for rebar imports is still strongly up as higher asking prices from Turkish mills are being accepted. Scrap prices in the Black Sea area are also still on the upswing, as are the billet prices. Even though last week registered a modest price increase, the next price increase may push all future offers above $26.00 cwt and then some. Rebar buyers are still buying large import tonnages as domestic mills struggle to meet summer demand. Also, many shipments, from Turkey in particular, are delayed, and this is adding to the current shortage of rebar in the market. US government statistics show that in April 2006 (the most recent monthly import data available), the top five countries from which the US imported rebar from were: Turkey, at 246,078 mt; Taiwan, at 37,971 mt; Japan, at 21,218 mt, Romania, at 6,650 mt; and Mexico, at 6,287 mt. These numbers are staggering, but these tonnages are still not enough to satisfy the appetite of the urbanizing US market. Demand for rebar in the US is still going strong, with the construction market still booming. Scrap prices are also picking up in the US, which will eventually move rebar prices up. As we announced last week, Nucor has increased their June offering prices for rebar by $1.00 cwt., so as of June 1, domestic rebar offers will range from $26.50 cwt. to $27.00 cwt. ($584 /mt to $595 /mt or $530 /nt to $540 /nt) FOB mill. To some rebar customers, especially certain fabricators, these price announcements don't apply. For these customers, Nucor strictly matches import prices. Now that import prices are very close to domestic prices, it remains to be seen if Nucor will drop this practice in the upcoming months. Rebar prices are getting close to their all-time highs from 2004. Time will tell whether or not the market will be able to sustain these high prices much longer. When rebar prices came down in 2005, the market felt the pain, but it wasn't disastrous because the demand continued throughout 2005. However, this time traders may not be so lucky.