US rebar market takes a breather along with scrap

US rebar producers are keeping prices stable in September, pausing the momentum that the domestic rebar market has picked up over the past couple months.

With benchmark shredded scrap prices only rising $3/ton this month (though market sources indicate East Coast scrap prices rose by about $10 to $20/ton), Nucor did not have enough support on the raw materials side to raise prices again, especially as mills struggled to achieve their $40/nt ($44/mt or $2.00 cwt.) August price increase, despite the $60/ton rise in July scrap prices. So for now, US domestic rebar offers continue to range from approximately $25.50 cwt. to $26.00 cwt. ($562 /mt to $573 /mt or $510 /nt to $520 /nt) ex-mill.

Still, the market is in decent shape due to the low inventory levels and slight pick-up in demand, and there does not seem to be much risk of prices backsliding again as the global billet and rebar markets continue to rise. The US scrap market is also pretty strong due to tight supplies and increasing demand. Therefore, there is still a strong chance that both prices and demand US rebar market will continue to improve through the fourth quarter.

On the import side, Turkish longs mills continue to raise domestic and export  prices due to the strong billet and scrap prices in the region, and this has pushed rebar offers to the US up by about $1.00 cwt. since last week, putting offers at a range of $26.00 cwt. to $27.00 cwt. ($573 /mt to $595 /mt or $520 /nt to $540 /nt) duty-paid, FOB loaded truck in US Gulf ports. However, with the Turkish import price being above the domestic price, there is no US interest in these offers. Furthermore, Mexican rebar offers to to the US can still be found at a more competitive range of $24.50 cwt. to $25.50 cwt. ($540 /mt to $562 /mt $490 /nt to $510 /nt) delivered to California and Texas, and are therefore usually the obvious choice for anyone interested in buying import rebar.

The Turkish mills and the Middle Eastern market in general are about to enter the month of Ramadan, which begins August 22. There is some uncertainly about how this will affect the market, though, as steel consumption and purchasing activity in the region will undoubtedly decrease during this period, although production will also slow. Despite the usual sales slump the market undergoes during Ramadan, producers generally expect the market to start increasing again by the end of the holiday (the fourth week of September) due to the drop in production and the resulting tightening of inventories.

US rebar import volumes saw a moderate increase in July, rising to 32,292 mt (based on license data) from 18,968 mt in June (based on census data), due largely to a solid rise in imports from Mexico (from 13,558 mt in June to 22,796 mt in July). The other main offshore sources in July were Turkey, with 7,021 mt; and Dominican Republic, with 2,204 mt.