US rebar prices are firming up as mills are on track to push through a modest price hike for August.
As reported by SteelOrbis, US longs market leader Nucor advised customers Wednesday it will raise its rebar prices by $40/nt ($44 /mt or $2.00 cwt.) as of August 1, absorbing $20/nt ($22 /mt or $1.00 cwt.) of the $60/nt ($66 /mt or $3.00 cwt.) rise in the RMS by lowering base prices. This price move indicates that while it feels the market is strong enough to reflect some of the rise in scrap costs, it is not confident that customers would accept the entire increase. Still, the increase is a bit larger than was expected and is reflects some new-found strength in the market; several months ago, even a $20/nt increase would be unfeasible, while today, the chance that a $40/nt increase may be accepted, or that at least a portion of it will go through, is highly likely.
Pre-increase, most US domestic rebar offers ranged from approximately $24.50 cwt. to $25.00 cwt. ($540 /mt to $551 /mt or $490 /nt to $500 /nt) ex-mill. But with the most recent increase, domestic rebar spot prices would rise to about $26.50 cwt. to $27.00 cwt. ($584 /mt to $595 /mt or $530 /nt to $540 /nt) ex-mill. Customers expect prices to inch up to this level in the coming weeks, though they are not quite there yet. Demand remains weak, and most customers are still only booking on an as-needed basis to fill holes in their inventories. However, despite the soft demand, the price increase may encourage a slight up-tick in hedge buying.
Going forward, if scrap prices give back any of their July gains, the slight upward trend for domestic rebar prices could quickly fall flat, since higher scrap costs are the sole reason for the August hike. So, it is too soon to say whether the current uptrend will last long enough for mills to be able to push through another increase in September.
On the import side, Mexican mills have raised their prices by about $2.00 cwt. since last week, following the US scrap-based domestic hike, putting most offers at about $24.50 cwt. to $25.50 cwt. ($540 /mt to $562 /mt $490 /nt to $510 /nt) or delivered to California and Texas. However, there is a good chance that this price hike will not stick, as Mexican rebar offers were getting little traction at their previous level. Furthermore, Mexican mills are seeing very poor demand in their domestic market and will likely be willing to lower their prices if they do not get much orders at the new price level. Mexican mills have tried to raise their domestic rebar prices several times in the last couple months, but were unsuccessful in doing so.
Turkish rebar offers rose since last week, by about $1.00 cwt., to a level of $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 ports. However, it is even less likely that the new Turkish price levels will be accepted since mills were unable to get any orders at the previous price level, and US customers can obtain better priced offers and quicker deliveries from domestic or Mexcan mills. Furthermore, Turkey, Europe and the Middle East are going into a usual seasonal slowdown for the summer, with Ramadan following shortly thereafter. The coming seasonal slowdown in these markets makes it all the less likely that the recent increases will go anywhere. Already, Turkish scrap buying ex-US and elsewhere has come to screeching halt due to the soft rebar and wire rod sales in the region.
US DOC license data show that the US imported approximately 16,705 mt of rebar in June, which is down considerably from the 40,840 mt imported in May and the 60,723 mt imported in June of last year. The top import sources for rebar in June were Mexico, with 11,126 mt, and Dominican Republic, with 5,493 mt.
