Rebar distributors are reporting improvement over March sales in April, but the conditions on the ground are far from being good.
US domestic rebar offering prices have stayed stable since last week, after seeing slightly better sales conditions. Normally a strong month due to spring stocking activity, this March has been a total disappointment for rebar and mesh sellers. Meanwhile, even though sales picked up some, the tons that were sold are adding up to significant losses for distributors because these rebars were bought at the height of the market, when rebar prices were north of $50 cwt. ($1,102 /mt or $1,000 /nt).
Most US domestic offers continue ranging from about $24.00 cwt. to $24.50 cwt. ($529 /mt to $540 /mt or $480 /nt to $490 /nt) FOB mill. There has been little change in the US rebar market in the last three weeks. Inventory levels continue decreasing, but demand continues to be weak. Optimists believe that demand will see an up-tick within the next couple of months. Other market players believe that demand will not improve until the end of the year, and therefore expect a continuation of the downward price trend that might only be reversed by a significant increase in raw material prices. US scrap prices have been firming up lately thanks to a flurry of buying activity from abroad, but the recent scrap price increases could be too minor to make a positive impact on rebar prices. The more likely scenario is that the ailing economy and resulting low demand for building materials will continue to put downward pressure on rebar prices, and we might see further modest declines in domestic prices.
Concerning imports, the uptrend in Turkish prices in recent weeks has not seen a reversal since last week and mills continue increasing their export offer levels. No recent deals have been heard of between Turkey and the US, however. Most new offers from Turkish mills now range from $23.50 cwt to $24.50 cwt ($518 /mt to $540 /mt or $470 /nt to $490 /nt) duty-paid, FOB loaded truck in US Gulf ports, which reflects an increase of $1.00 cwt. ($22 /mt or $20 /nt) since last week. However, the recent price increases are mainly due to scrap price increases, not strong sales.
The movement in Turkish rebar prices was met with the opposite for Mexican rebar offers. Mexican rebar offers for the US continue trending down. Offers dropped by $0.50 cwt. from last week and now are seen at levels of $21.50 cwt. to $22.50 cwt. ($474 /mt to $496 /mt or $430 /nt to $450 /nt) loaded truck in Houston. While two major Mexican mills are not offering, one continues to make competitive offers.
Traders have mostly sold out their inventories in the Gulf but they still have some inventories on the West Coast that are not moving. California is one of the worse faring rebar markets due to the housing crisis, as the state is ridden with a high amount of foreclosures and soaring unemployment.
In regards to the general US economy, although reports this week indicate the recession is far from over, they seem to at least signal a slowdown in economic deterioration.
