While most spot prices in the US rebar market are stable this week, there is a growing sense that offers are very negotiable, especially in light of current scrap predictions.
Predicting scrap prices has never been an exact science, with trends often turning on a dime and confounding previous expectations. Just a month ago, there were rumors that shredded scrap pricing could increase in May. A couple weeks later, speculation settled on a sideways trend. And now, while many are still holding tight to neutral speculation, the potential for scrap pricing to decrease--by around $20/long ton--is becoming more probable. Even David Hodory, Vice President of Marketing and Communications for Nucor subsidiary DJJ, announced during Wednesday's SteelOrbis Scrap Webinar that "May looks to be a softer market" for US scrap.
If scrap indeed drops slightly this month, the trend will put even more pressure on an already anemic US rebar market. Construction activity is not strong, purchasing activity is weak, and mills are barely able to hold onto already low spot prices. The current spot range has remained level since last week, with most offers still in the range of $34.00-$35.00 cwt. ($750-$772/mt or $680-$700/nt) ex-mill. But sources tell SteelOrbis that offers are negotiable, and mills are undecided about whether or not to drop transaction prices if scrap goes down.
At the very least, domestic mills don't have to worry much about imports. Although some US mills have been taking more notice of imports lately, the rebar market in top import source Turkey has been trending up, putting import offers too close to US domestic spot prices to be of much interest in the current demand atmosphere. Turkey's local and export prices have increased in the last week, but so far, those price hikes have not yet translated to sales prices in the US. The current import range from Turkey is still $33.00-$34.00 cwt. ($728-$750/mt or $660-$680/nt) duty paid FOB loaded truck in US Gulf ports. However, there is a very good chance that offers could rise by next week.
As for Mexican rebar mills, they are continuing their "make me an offer" strategy, with many transactions heard of beneath $33.00 cwt. ($728/mt or $660/nt) duty paid FOB delivered to US border states. It remains to be seen if Mexican mills will once again offer a solid range after US prices are announced within the next week or so, or if they will continue their current highly negotiable pricing policy.