While US rebar demand continues to be depressed, pricing remains relatively steady due to tight supplies and stable raw material costs.
After increasing, on average, by $0.50 cwt. ($11 /mt or $10 /nt) – only half of Nucor's modest June increase – earlier this month, domestic rebar offers have remained at a range of about $24.50 cwt. to $25.00 cwt. ($540 /mt to $551 /mt or $490 /nt to $500 /nt) ex-mill. This week, Nucor Corporation announced that it would keep rebar prices stable through July, keeping both the raw material surcharge (RMS) and base prices unchanged from the June levels. Unlike other products in the US market, such as flat rolled sheet, it seems that rebar demand just isn't strong enough to support another price increase in the near future.
This is not to say, however, that US rebar demand is completely stagnant. Distributors and fabricators have been reporting slightly higher levels of activity in recent weeks, as inventories continue to be depleted and import offers remain scarce. On the US West Coast, the rebar market also remains depressed, although some firms report an increase in truckload sales activity, which is an improvement compared to a couple of months ago, when there were virtually no sales transpiring. In addition to the tightening supplies and resulting minor boost to sales, the fact that scrap prices have remained stable this month has also helped to further stabilize longs prices.
Still, although customers are starting to fill holes in their inventories, no one is stepping up and buying big. Residential and commercial construction both remain depressed, and companies are seeing little if any money from the $787 billion US stimulus package being allocated for infrastructure projects either, as the bureaucratic process to get these funds is proving to be time-consuming and arduous.
Similarly to US mills, Mexican rebar mills have not been getting major bookings from US customers either. As a result, import offers from Mexico have slipped by about $0.50 cwt. ($11 /mt or $10 /nt) since last week, bringing most offers to a range of $22.50 cwt. to $23.50 cwt. ($496 /mt to $518 /mt or $450 /nt to $470 /nt) delivered to Houston. There is generally very little interest in import offers right now, but Mexican mills have as much better of getting bookings than their Turkish counterparts.
While import rebar offers from Mexico have softened since last week, Turkish imports have edged further upwards, despite the lack of US bookings. Traders have raised their Turkish rebar asking prices for the US by about $0.50 cwt. ($10 /nt or $11 /mt) since last week, bringing offers to a range of about $24.00 cwt to $25.00 cwt ($529 / mt to $551 /mt or $480 /nt to $500 /nt) duty-paid, FOB loaded truck in US Gulf ports. However, it remains to be seen whether any US orders will be booked at this new price level.
On the economic side, housing market data signaling a slow but sure turnaround. According to the Commerce Department, US housing starts in May reached 532,000, up 17.2 percent from the revised estimate of 454,000 in April. Moreover, building permits jumped by four percent to a rate of 518,000 from 498,000 in April. Both figures were higher than expected.
Despite these improvements, overall, US residential construction is still depressed and remains significantly down from last year; in May 2008, housing starts were reported at 975,000.