While most buyers expected merchant bar prices to remain stable in October, Nucor has defied expectations, increasing merchant bar prices by $0.50 cwt. ($11 /mt or $10 /nt) for October shipments.
As announced during this past week, Nucor upped their raw materials surcharge (RMS) by $0.85 cwt. ($19 /mt or $17 /nt) to $6.65 cwt. ($147 /mt or $133 /nt) for October shipments after shredded scrap prices increased earlier in the month. The company will lower its base prices for merchant bars by $0.35 cwt. ($8 /mt or $7 /nt), resulting in a net increase of $0.50 cwt. ($11 /mt or $10 /nt).
This move surprised some market insiders as stability rather than upward movement seemed to be the more popular expectation for the month of October. Despite being a little surprised, market insiders may be feeling some relief as this price increase is reflective of the market conditions. Nucor did increase its RMS, though the company made a corresponding downward adjustment to rebar base prices, resulting in no net change in transaction prices for October. The cost of raw materials went up, but the rebar market is not strong enough to handle an increase, and as of last week, some believed merchant bars would share a similar fate.
Demand for merchant bars, while still relatively weak, is a decent amount stronger than that for rebar, and may even be picking up some. Also, import competition is almost negligible. The October price increase may be a good indication of what the fourth quarter pricing trend will be.
Effective with October shipments, domestic merchant bar prices will range from $33.85 cwt. to $41.55 cwt. ($735 /mt to $905 /mt or $667 /nt to $821 /nt), depending on size, shape and thickness.
Domestic scrap prices for October are expected to move very slightly if at all. Sources are predicting a possible shredded scrap adjustment of up to $10 /long ton. If scrap prices stay neutral, it is expected that merchant bar prices will remain flat for the following month; however, if scrap prices go up slightly and demand continues to strengthen, merchant bar prices could inch up as well.
Import merchant bar offers from most sources are trending upward. Chinese offers are so high that they are virtually absent from the market, and they are still trending upwards. Also, the ongoing concern about Chinese hollow structural sections not complying with ASTM specifications has some service centers acting with much caution where Chinese products are concerned.
Taiwanese offers are in the same range as they were two weeks ago, however, prices are trending upwards as both freight rates and billet prices have increased. More traders are offering Taiwanese material now, and the West Coast is saturated with offers. The Gulf Coast is receiving more offers from traders as well, since Taiwanese mills are now wrapping their material to gain more acceptance from the Gulf Region.
Taiwanese offers are still ranging from $33.00 cwt. to $34.00 cwt. ($728 /mt to $750 /mt or $660 /nt to $680 /nt) FOB loaded-truck, at Gulf and West Coast ports.
Turkish offers have increased by approximately $0.50 cwt. since our last report two weeks ago and are now ranging from $36.50 cwt. to $37.50 cwt. ($805 /mt to $829 /mt or $730 /nt to $750 /nt) FOB loaded-truck, US Gulf ports. Even though US buyers will order some of the very light sections, transporting them at economical rates from Turkey is a major problem, due to the lack of major break-bulk freight from the Black Sea to the US ports.