While US rebar prices are officially remaining stable, with the continued weak demand buyers say that spot prices are still trending downward.
Leading US rebar producer, Nucor Corp., surprised some customers this week with its announcement that it would raise base prices by the same amount that its raw material surcharge (RMS) will increase ($30/nt), to keep net transaction prices unchanged. The announcement was somewhat surprising since rebar demand did not seem to be strong enough to justify an increase in base prices.
Then again, the announcement was not too shocking, since in a weak market spot prices will inevitably decrease, if not officially, then in the form of special discounts for large orders or select customers. One trader explained to SO this week, "There are private deals going on anyway. Mills figure it won't do any good to publicly take down the official price."
For now, most domestic rebar offers continue to range from approximately $27.00 cwt. to $27.50 cwt. ($595 /mt to $606 /mt or $540 /nt to $550 /nt) FOB mill. However, it remains the case that there are special deals conducted at under this range, particularly for mill-affiliated fabricators. Furthermore, with US rebar demand remaining very weak and import offers available at several dollars per hundred weight under the domestic level, the pricing trend for domestic rebar is still down.
On the import side most Turkish rebar offers for the US continue to range from approximately $23.50 cwt. to $24.50 cwt. ($518 /mt to $540 /mt or $470 /nt to $490 /nt) duty-paid, FOB loaded truck in US Gulf ports. However, the price trend for these offers is also still headed downward as Turkish mills are hungry for business and are passing along the decreases in their scrap costs.
Still, there are not too many import orders being booked right now since buyers do not want to take on the added risk of buying imports when prices may very well weaken further by the time the material arrives. For most customers, keeping low inventory levels is key and speedy, domestic shipments are generally preferred. Domestic producers continue to monitor import prices though, since if the price differential between import and domestic material becomes more pronounced, imports may appear more attractive to buyers.
Import offers from Mexico remain more of a threat to domestic mills than the Turkish offers because of the quicker delivery times. But again, with the lack of demand, there is very little sales activity taking place, domestic or otherwise. Currently, Mexican rebar offers for the US range from $24.50 cwt. to $25.50 cwt.($540 /mt to $562 /mt or $490 /nt to $510 /nt) loaded truck in Houston, and prices will likely continue to trend down along with the US domestic market.
In the longer run, the US rebar market is still somewhat hopeful about the $787 billion stimulus package that President Obama signed into action this week, and about the roughly $80 billion of the package that is dedicated for infrastructure. While controversy continues to surround the "Buy American" clause contained in the stimulus, the amount of steel consumption directly resulting from the stimulus projects will be minimal, regardless of whether it is domestically produced or imported. The main factor determining the effect that the stimulus will have on rebar and other steel products is whether it will, indeed, stimulate, the economy, which would have a wide-ranging, positive impact on steel sales and consumption.