The rebar market came to life in February with elevated raw materials pricing, tariff activity, and mill price increases, all impacting the steel market in a major way. The market spent the month digesting the impact of a $50/ton bump in scrap, a $40/ton increase in rebar pricing, and a proclamation by the administration that closed all loopholes in the 232 tariffs and affects supply moving forward. The wild ride and those factors now set the stage heading into March.
On the domestic front, mills have realized the majority of both the January price increase ($30/ton) as well as the February increase ($40/ton). While the specific rollout of these increases varied from mill to mill and region to region, as we begin March, general rebar market pricing is up 10% from the beginning of the year. Strong sales through the month have depleted mill inventories and helped mills to push the higher pricing to begin in March. In addition, mills are looking to hold prices in the face of expected rising scrap prices for the month ahead. In fact, there are whispers that mills may try another increase for March with higher raw material costs affecting their bottom line. On the flip side, mills are seeing pricing pressure from imports, and further increases would likely only encourage more imports into the US. In addition, most agree that overall demand for the current year will struggle to support such increases with a more than adequate supply picture moving forward in the rebar market.
Foreign mills have once again set their sights on the US market. The tariff actions and scrap increases have largely been limited to the US market only, so too have the recent price increases. With prices rising 10% in the states, there is once again a spread between import offers and domestic sales prices. Import pricing has increased slightly from the start of the year but not to the extent of the US mill pricing. The result is more attractive pricing when comparing to US mills. And while the 232 Proclamation did close the door on countries like Brazil, Canada, Mexico & Ukraine that were exempt from the 25% tariff, it ironically seems to have opened the door for the traditional suppliers of the previous years, such as Turkey, Algeria, Egypt & Vietnam, who have historically been able to absorb the tariff and still be competitive. Purchases made in February & March are not likely to arrive in the US for several months, but they will no doubt affect the current pricing in the rebar market moving forward.
On the scrap side, market participants are expecting pricing to go up in March once again. The effects of the announced 232 proclamation have greater supply impacts on steel products outside of the rebar market, and mills that manufacture those products are ramping up production, and their needs for raw materials are also being ramped up. The entire raw materials market is on the upswing, and shredded scrap (the raw material used in rebar) is caught up in the vacuum. Most agree that the scrap increases are temporary and there will be a backslide in the scrap market, but for now it looks to have legs that may go on a 3rd month. With at least a week to go before the final March numbers are published, most believe the increase in the range of $30-$40/ton. We will keep you posted when scrap does settle.
In the meantime, have a wonderful start to the month of March. We will update any events that further impact the rebar market.