In the first week of the New Year, US domestic rebar asking prices have risen, but have still yet to reflect the full $65/nt ($72/mt or $3.25 cwt.) transaction price hike announced by mills last month.
With most domestic rebar offers rising to an approximate range of $24.00 cwt. to $24.50 cwt. ($529/mt to $540/mt or $480/nt to $490/nt) ex-mill, the market is up by about $1.00 cwt. ($22/mt or $20/nt) since late December, and up about $2.25 cwt. ($50/mt or $45/nt) since the January price increase was announced in mid-December. Prices still need to rise another $1.00 cwt. before they will reflect the full January hike, and while the price trend remains up, there is not much activity transpiring at the current range.
Despite the ongoing weak demand for most long products, including rebar, raw material costs are expected to rise further in January and there is a good chance that mills will try to push through the remainder of the previous price hike by announcing another decent-sized net price increase for February. Mills' efforts to get prices up at least modestly in the first quarter will be aided by low inventories and lack of import alternatives.
On the import side, Mexican offers remain at the same range as last week, with most ranging from $23.00 cwt. to $24.00 cwt. ($507/mt to $529/mt or $460/nt to $480/nt) delivered to US border states. However, even with the increase in domestic offer prices, there remains very little interest in Mexican offers at this range. That said, the price trend for Mexican import rebar offers also remains up, as more US domestic price increases are expected and Mexican mills will likely try to get their offers up accordingly.
Meanwhile, due to rising raw material costs in Turkey, Turkish rebar offers continue to rise and thus remain priced out of the US market. Still, there are some who question how much longer the up-trend in Turkish longs offers can last when mills are getting very few orders.
Looking at the demand situation for rebar in the US, the recovery remains slow, at best, as some end markets, such as nonresidential construction, are still in decline. According to a new analysis by the Associated General Contractors of America (AGCA), US construction spending dropped by over $137 billion in November to a six-year low of $900 billion. "Private nonresidential construction is in freefall, with every category except private power construction down sharply compared to a year ago," said Ken Simonson, the association's chief economist. However, a recovery in homebuilding may spark some improvement in retail construction later this year, and higher education and hospital construction may come back in the second half of 2010, the economist suggested.
Simonson also noted that public construction benefitted from federal stimulus funds, with a year-over-year increase of 2.7 percent. He predicted, however, that those gains will continue to be tempered by sharp cutbacks in projects funded directly by states, local governments and school systems.