As predicted by SteelOrbis, US rebar leader Nucor Corp. did not raise its rebar transaction prices despite the rise in December scrap numbers.
The leading domestic minimill announced late last Friday that it will raise its longs raw material surcharge (RMS) from $0.00 cwt. currently to $70.00 cwt. ($3.50 cwt. or $77 /mt) as of January 1, though it will decrease its base prices for rebar by the same amount, resulting in net rebar prices remaining unchanged from December to January.
While US rebar demand is not strong enough for customers to accept a price increase, it is still a positive sign that net rebar prices will not see another official decrease in January that scrap prices have risen above Nucor's RMS Program Baseline of $162/nt (the latest US shredded scrap prices SteelOrbis hears are over $230/long ton), resulting in the RMS being reinstated. If scrap prices continue to rise in December and January, an increase in net rebar prices could be announced for February shipments.
For now, given the weak demand and economic uncertainty, the pricing trend for domestic rebar remains neutral. Most domestic offers continue to range from $28.00 cwt. to $28.50 cwt. ($617 /mt to $628 /mt or $560 /nt to $570 /nt) ex-mill. There may be some quiet deals concluded below this level, but most offers fall within the above range.
It is noteworthy that despite the cheaper imports, domestic mills have not announced any "foreign fighter" discounts for certain commonly imported sizes, like 40-footers. It is possible that the mills may offer some import price matching on a case-by-case basis, but the absence of a foreign fighter discount, which usually appears in a down market, indicates that the mills are not terribly concerned about imports.
The domestic mills are probably correct in their assessment of the import threat, or lack thereof - despite imports being lower priced than domestic material, there is very little import rebar arriving at US ports, and very few new orders are being placed. Distributors' inventories are getting lower, especially for certain sizes. Once the distributors want to replenish their inventories, a serious shortage may develop due to the lack of new imports coming in. For now, though, demand is still weak enough that the reduced supplies are not an issue, and there are still decent-sized inventories of more common sizes.
Most new import rebar offering prices have trended sideways since last week, at a range of approximately $25.00 cwt. to $26.00 cwt. ($551 /mt to $573 /mt or $500 /nt to $520 /nt) duty-paid FOB loaded truck in US Gulf. Turkey leads the way with the most competitive pricing. Some Mexican mills are still holding their guns at a range of $30.00 cwt. to $31.00 cwt. ($661 /mt to $683 /mt or $600 /nt to $620 /nt) for January production (includes delivery to inland destinations), while other mills have downwardly revised their offers to match those of the other import rebar sources offering to the US.
As with the US domestic rebar market, the overall pricing trend for the import rebar market in the US is neutral, as US scrap prices have rebounded, inventories are drawing down, and prices are no longer seeing huge drops on a week-to-week basis. While prices remain somewhat negotiable due to the overall weak demand, it is expected that ,once the market reaches a clear bottom and demand starts to improve, these discounts will quickly disappear. However, the wild card in this equation remains the state of the world economy, and the steel market knows that there is probably more bad economic news still ahead of us.