Although business remains painfully slow for most US rebar outfits, both domestic and import prices are expected to continue edging upward in January.
On top of the already weak US demand for rebar due to the continued slump in construction, activity has slowed even further in recent weeks as seasonal factors -- the cold winter weather and the holiday season -- have set in. However, most firms are looking to early 2010 with at least some guarded optimism, as customer inventories are low and raw material prices are expected to post another increase in January.
US mills have yet to successfully push through their full $3.25 cwt. ($72/mt or $65/nt) transaction price hike to rebar spot prices announced in December, though most producers are still bullish about getting the full hike in January. That said, it may take another big push from mills, in the form of an additional price increase announcement, in order to get the first hike through.
For now, most domestic rebar transactions continue to range from approximately $23.00 cwt. to $23.50 cwt. ($507/mt to $518/mt or $460/nt to $470/nt) ex-mill, though offers at the upper end of that range are still encountering some resistance. Nevertheless, the pricing trend remains strongly up as both producers and distributors alike are generally expecting that customers will be paying more for rebar in January. Cut-grade scrap is anticipated to see a decent-sized increase of at least $30/ton, most, if not all, of which mills will attempt to push through to rebar spot prices. There are also early expectations that scrap prices will rise in February as well.
As regards imports, activity remains similarly quiet, with Mexican offers getting very few bites. Most offers still range from $23.00 cwt. to $24.00 cwt. ($507/mt to $529/mt or $460/nt to $480/nt) delivered to locations in US border states, which is not competitive enough to attract many bookings. Regardless, with Mexico remaining the US' only viable import rebar source, the price trend for import rebar is also pointing upward, with offers expected to closely reflect the US' raw material-based price increases in early 2010.
The below import census and license data from the US Department of Commerce illustrate the low levels of import rebar tonnage in 2009 when compared to recent years. In particular, Turkey, once a primary supplier of rebar to the US market, currently remains out of the US market since with its own rising raw material costs and other factors, it cannot compete with US domestic or Mexican prices. This situation is not expected to change in the near future, meaning that the US market will remain primarily domestic-controlled for some time to come. This will help US producers to retain at least some price control, despite the absence of a strong demand rebound in sight.
