Although the US domestic merchant bar market has remained steady in terms of demand and prices, mills might attempt to shake things up with a price increase in the next month.
As expected, US merchant bar mills followed the neutral scrap trend this month with no change in transaction prices for September shipments (the second such move in a row). However, considering the US domestic merchant bar market's solid demand levels and the ease with which merchant bar mills get their full asking prices, sources tell SteelOrbis that mills might be looking to shake up prices soon.
Already, spot deals below asking prices are few and far between, even for large customers, and if speculation on September scrap prices moving sideways to perhaps slightly up comes to pass, sources expect mills to seize on even the slightest uptick in raw material costs to justify a transaction price increase for merchant bar. Part of the reasoning behind this is the high production cost of merchant bar, in relation to other products that most merchant bar mills produce in tandem, such as rebar. If mills do decide to make a move that could widen their profit margins, they will very likely be successful. Until then, US domestic merchant bar prices are still in the range of $45.30-$50.50 cwt. ($999-$1,113/mt or $906-$1,010/nt) ex-mill, depending on size and shape.
As for imports, sources tell SteelOrbis there has been a minor influx of material into the US, but US mills are not concerned, even with currently-arriving import tags at a few dollars lower than current US domestic prices. New order activity, on the other hand, has been quiet in the last few weeks, partly because import prices have increased in the last month, by approximately $2.00 cwt. ($44/mt or $40/nt) from Turkey to $44.00-$46.00 cwt. ($970-$1,014/mt or $880-$920/nt) DDP load truck at US Gulf ports.
Also, US buyers have already stocked up throughout the summer on the niche products that are harder to find in the US domestic market. According to the license data from US Steel Import Monitoring and Analysis System (SIMA), Canada has accounted for the largest share of imported merchant bar arriving this month, with 1,223 mt of the overall 3,065 mt from all sources so far in August. There is a good chance that August tonnage levels will at least reach July levels of 7,220 mt by the end of the month, although it would still be a slight downtick from June's 9,947 mt (the highest level so far in 2011).