As rebar buyers try to negotiate below current rebar spot prices, US mills are determined to lift July shipment prices by at least $20/nt.
In an attempt to boost a sagging domestic market, US rebar mills will try to push through the $1.00 cwt. ($22/mt or $20/nt) price increase for July shipments, but their expected success is questionable. As it is now, sources tell SteelOrbis that mills are barely able to sustain the current $33.00-$34.00 cwt. ($728-$750/mt or $660-$680/nt) ex-mill spot price range, and although they will soon start pegging prices at $34.00-$35.00 cwt. ($750-$772/mt or $680-$700/nt) ex-mill, it won't last long. Demand is simply not strong enough to support higher prices--even though scrap prices increased this month--and in order to fill order books, mills will most likely have to be flexible.
Rebar's most influential demand driver--construction--has not exactly stabilized in the economic recovery; even good news such as a 5.2 percent year-on-year increase in US building permits in May was dampened by a 3.4 percent year-on-year decrease in housing starts and whopping 22.5 percent year-on-year decrease in housing completions for the same month. Furthermore, several construction news outlets have reported that contractors feel increasingly squeezed by higher material costs (US domestic rebar prices are approximately 12 percent higher now than they were the same time last year), which could soon stall or delay projects--a situation that could have a domino effect all the way up to the mill level. US rebar mills might have ambitions to stimulate the marketplace by upping prices a bit, but from an end-use point of view, stability would be more beneficial in the long-run.
For most of this year, rebar import activity in the US has been unstable (following an up-and-down pattern each month instead of a steady trend), but if US domestic rebar mills are determined to push through higher prices, the import trend could point up soon. Already, Turkish rebar prices, which have been level with US domestics for a few weeks, are on the verge of softening. Prices are still in the range of $33.00-$34.00 cwt. ($728-$750/mt or $660-$680/nt) DDP loaded truck in US Gulf ports this week, but sources tell SteelOrbis that lower prices are just around the corner.
Any decrease in Turkish prices would boost their competitiveness with Mexican offers, which are also unchanged at $33.50-$34.00 cwt. ($739-$750/mt or $670-$680/nt) DDP loaded truck delivered to US border states this week. Import inquiry activity--even to Mexico, with its attractive lead times--has been tepid as of late, but if Mexican mills sense the unease in the US market and Turkish prices drop significantly, sources say US buyers can expect Mexicans to make price adjustments as well.