The gap between spot prices for domestic rebar and official mill prices has not narrowed further in the last week, even though another transaction price increase is all but guaranteed next month.
While there is still an approximate sizeable spread between domestic rebar mills' official asking prices and spot prices, there doesn't seem to be any indication of spot prices firming just yet. Current spot prices are still in the range of $29.50-$30.50 cwt. ($650-$672/mt or $590-$610/nt) ex-mill , but the flurry of purchasing activity in the last two weeks to get ahead of the Dec. 1 effective date for mills' latest $1.00 cwt. ($22/mt or $20/nt) price increase has dwindled, and without the support of strong end-use sector demand, there is not much incentive for mills to push for their post-increase transaction prices of $32.75-$33.25 cwt. ($722-$733/mt or $655-$665/nt) ex-mill, let alone the pre-increase price range of $1.00 cwt. less.
So far, there haven't been any definitive guesses for shredded scrap pricing in December, other than the near certainty of an increase. Some in the industry predict a $10-$20/long ton increase, which would all but assure a subsequent $1.00 cwt. increase in rebar transaction prices for January shipments. However, there are some who believe that mills are increasingly bullish on scrap for next year's first quarter, opening up the possibility of a more substantial hike in rebar prices-some estimates peg the January increase at up to $2.00 cwt. ($44/mt or $40/nt).
Partially bolstering domestic mills' optimism about future pricing is the continuously slack import market for rebar. Many US customers still do not want to take the gamble on overseas shipments, a situation which has affected the import market for several months. With just days left in this month, import data from the US Import Monitoring and Analysis System (SIMA) show a significant drop in import activity in November, following a declining pattern since August. According to license data, the US has only imported 15,579 mt of rebar in November as of the 23rd, compared to 25,791 mt (preliminary census data) in October. That drop follows a 16,613 mt drop from September to October and a 12,574 mt drop from August to September. Even more telling, the US has not imported a single ton of rebar from Turkey this month, compared to 16,136 mt imported in October.
This startling data can be almost entirely attributed to Turkish import offers, which have been unattractively high for months. Currently, prices are in the approximate range of $30.25-$31.25 cwt. ($656-$678/mt or $595-$615/nt) duty paid FOB loaded truck in US Gulf ports, and there is a strong indication that prices will rise by next week.
Across the border, however, Mexican offers have seen steady activity, and there are even reports that major Mexican rebar mills are sold out through December. Furthermore, offerings for January shipments are being priced speculatively, based on what Mexican mills think US mills will do. Spot prices below the official asking range of $28.75-$29.75 cwt. ($634-$656/mt or $575-$595/nt) duty paid FOB delivered to US border states have dried up, and if the gap between US mill spot and asking prices narrows in the face of an imminent December scrap increase, Mexican mills will likely respond with higher asking prices of their own.