Both import and domestic rebar offers in the US have trended sideways in the last week, as the slow draw-down of inventories continues. Meanwhile, the US House of Representatives voted in favor of President Obama's economic stimulus package Wednesday, which could mean good news for the US rebar market, indeed.
While existing rebar inventories in the US continue to shrink, traders say that there have been a few shipments booked from Turkey in recent weeks. Accordingly, there will be more import tonnage arriving in the coming months (much of the tonnage that was booked will arrive in March), although there is not a concern that these imports will bring down the market since it is common for import tonnage to rise in the spring season. Traders also mention that even with the up-tick in orders recently, the total amount of March arrivals will still be much lower than in a usual year.
New rebar offers from Turkish mills to the US continue to range from approximately $24.50 cwt. to $25.50 cwt. ($540 /mt to $562 /mt or $490 /nt to $510 /nt) duty-paid FOB loaded truck in US Gulf ports. The market is still pretty quiet, though, with not many bookings taking place at this level. Turkish mills have indicated that they would like to raise prices, but the US market is not yet ready for a price increase. However, distributors and traders say that the rebar market on the Gulf Coast is still much better than the West Coast market, which one trader characterized as "pretty dead."
Meanwhile, after raising the prices by about $1.00 two weeks ago, Mexican mills have kept their offering prices for the US mostly steady since last week, with most offers continuing to range from approximately $25.50 cwt. to $26.50 cwt. ($562 /mt to $584 /mt or $510 /nt to $530 /nt) loaded truck in Houston. However, it remains to be seen if this new level will be accepted.
While there will be an up-tick in import rebar arrivals to the US in the first quarter of 2009, preliminary census data released by the US Department of Commerce this week show that in December, rebar imports hit their lowest monthly level of 2008, totaling only 12,448 mt. December tonnage is usually less than other months of the year, however 12K tons is a very small amount, even for December. For comparison, December 2007 rebar imports totaled 49,804 mt. In December 2008, the US' main import rebar sources were: Mexico, at 9,157 mt; Dominican Republic, at 1,873mt; Turkey, at 879 mt; Germany, at 489 mt; and China, at 40 mt.
Domestically, prices have also remained at about the same level since last week, with most US domestic offers still found in the range of approximately $27.00 cwt. to $27.50 cwt. ($595 /mt to $606 /mt or $540 /nt to $550 /nt) FOB mill. However, given the overall weak demand conditions, large tonnage customers are able to achieve slightly better prices.
On the spot market, distributors say that larger bars are currently a little more expensive than smaller bars, which is normally the other way around since smaller bars are less efficient to produce. However, there is currently a short supply of larger bars so they are offered at a premium.
Last but not least, the first and foremost issue on the minds of everyone in the US steel market (and all global markets, for that matter) is still the economy. On Wednesday, in a 244 to 188 vote, the US House of Representatives passed the $825 billion economic stimulus package favored by President Obama, despite opposition of all 178 House Republicans. Of interest to the steel market, included in the plan is $90 billion earmarked for infrastructure projects, as well as a provision for the exclusive use of domestic steel for the government projects that the stimulus package will fund. If this provision is included in the final version of the stimulus package, it should certainly provide a boost to the domestic rebar market, and eventually the import rebar market as well as imports will eventually have to pick up the slack when domestic mills get busier. The US Senate is expected to review and vote on its version of the stimulus package within the next week.