Late last week, before the holiday weekend, scrap for July posted at no change from June ($380/ton). This was a relative “non-event,” as most had anticipated no movement heading into July.
It remains surprising that, despite the perceived uptick in demand for finished product in June and recent tariff activity, scrap yards have yet to see a corresponding increase in demand for raw materials from the mills. With raw material costs unchanged, mills will likely base pricing decisions solely on demand and available supply moving forward.
We’ll continue to keep you updated. Have a great week!
As June closes, so does the first half of the year. Many would agree that while demand is not terrible, the spark that everyone expected for 2025 has failed to materialize. Tariff uncertainty and trade cases have cast a shadow on supply costs, and many suggest that that has stalled demand. Supply is very tight currently as we start the second half of the year. An unexpected increase in the 232 tariffs in June evaporated what little stock was in the pipeline, and the import vessels that had been scheduled to arrive now contain material that is subject to a much higher duty rate than originally expected. Most expect that the supply situation will improve as new supply comes on-line and with demand at the higher prices showing signs of fatigue.
Domestic mills have very little inventory on hand to end June, and most report July rollings are sold out. The increase is expected to fully “stick” as we head into July, and why would anyone expect mills to come off it? With little threat of imports and tight supply, whispers of a potential increase have started. However, mills may give pause as scrap has not increased, and raising prices further may appear “opportunistic.” Mills have been able to recapture their margin with the latest move, and further increases would ultimately come at the expense of downstream customers’ margin. Scrap’s reluctance to increase sends a strong message as to how strong demand really is. Mills have not increased their needs for raw materials recently from prior months. Mills will need to rely on their current customer base as new supply comes online and provides other sourcing options. To hammer further price increases now might not be the best look moving forward…. Still… there is the old saying “make hay in the summer…” So who knows?
On the import side… everything remains at a standstill. The material in the pipeline before the increased tariffs had little to no time to react to the increased costs. Importers are asking for the full increase, but with domestics only coming up $60/ton, that leaves the new costs on imports higher than domestic in many cases. The market in the US currently offers little incentive for new cargos to be booked. The lowest-cost producers also face trade cases that will only further deter imports from coming in. There is some discussion that Mexico and the US may come to an agreement to remove the tariffs on some specific volumes; however, any exact details have not been finalized, and that situation does not currently impact the market to any significant degree.
On the scrap front, most are expecting a sideways move for July. With stronger demand and higher prices, one would expect the scrap dealers to try and seize an opportunity to raise pricing. However, over the last several weeks, that does not appear to be the case, and the best guess as we start the trade this week for July is a sideways move. In addition, global scrap prices are trending sideways to softer, which only paints a similar picture. We will update you when the final number is posted.
In the meantime, have a great holiday week and a happy and safe 4th of July.
Comments Off on Update – Scrap Finalizes and Mills Increase Pricing
The news keeps rolling in this week. Chicago shredded scrap finalized last night at $380/ton, with no change from March pricing. Compared to prior months, it finalized very quickly this month given the uncertainty that surrounds the market right now with the tariffs this week and the trade cases. Domestic mills also wasted little time reacting to this week’s shift in the market, and last night a leading manufacturer announced a price increase of $60/ton on all rebar with an added twist of an additional $40/ton on 20’ rebar. With little change in the scrap market on hand, this move was no doubt an effort to capitalize on the market uncertainty and slow down the rush of orders heading to the domestic mills. Mills were already tight on inventory, and this week’s events caused a rush of demand at the mills that they likely were not able to maintain a schedule. This morning other mills have followed with their own versions of increases as well.
In the days and weeks ahead, the market will be determined by how much inventory was under contract and pricing locked and how much true demand is out there. If the demand is strong and very little material is covered at fixed pricing, these increases are more likely to stick as buyers will be forced to pay them. However, if mills begin to loosen with a lack of new orders at these higher prices, you will see the impact of that as well. No doubt that the market has done a complete 180 in a week, with lower prices no longer on the radar and buyers scrambling to figure out where a fair price should be with the new rebar landscape.
Since this is our 3rd consecutive daily update, we will try to let the dust settle a bit… (Not sure the market can handle more excitement in a week, and I am probably sure you are tired of hearing from us!!) We will continue to update events that impact the market. In the meantime, have a great rest of the week.
Comments Off on Update – Trade Cases Filed June 4th on Rebar
Lost in the chaos of the steel and aluminum tariff news from yesterday was the filing of anti-dumping petitions and countervailing duty petitions against the countries of Algeria, Vietnam, Bulgaria, and Egypt on concrete reinforcing bar. Since the closing of the 232 loopholes in February, these 4 countries collectively garnered the highest attention from US buyers of imported rebar. As such, the Rebar Trade Coalition (Buyer Steel, Commercial Metals, Gerdau, Nucor, Optimus, and Steel Dynamics) filed the petitions yesterday in an attempt to find dumping practices and assess further duties appropriately.
While this move may appear to be a moot point given the tariff increase, which already affects these countries and will likely kill any imports already, it would prove to further deter imports from these countries if the actions on the tariffs were reversed in the future. These petitions will be in place and will be another obstacle or hurdle in front of these countries to send their rebar to the US. The Department of Commerce will review the cases and decide in the months ahead.
We will continue to monitor this situation as well as others that impact the rebar market.
Late yesterday, President Trump signed a proclamation that officially increased the Section 232 steel and aluminum tariffs to 50% from 25%, effective 12:01 today, June 4th. The only exception made in the proclamation was given to the United Kingdom with an extension until early July. Further exemptions could potentially be granted in the future; however, as of now, this will dramatically curb the future flows of both steel and aluminum from outside of the US into the US. In addition, all materials in transit are potentially affected by this proclamation.
Looking ahead, with this change in the landscape of supply, buyers will have to rely on domestic supply to meet their needs. As seen earlier in the year, different steel products in the US rely on import supply to different extents. Rebar is one product that is less reliant on imports than many of the others. There is no doubt there will be disruptions in the next 30-90 days; however, long term, rebar supply and capacity in the states should be able to meet demand. Pricing may be subject to change based on where the supply and demand meet.
We will continue to update the changes that occur in the rebar market. Have a good day.
The dominating news in the rebar market as we enter June is the latest comments by Washington stating that imports on both steel & aluminum would double to 50% by Wednesday, June 4th. The statement was made by President Trump in a speech in front of the steelworker’s union late on Friday and was later posted on Truth Social heading into the weekend. While several news publications have also recaptured the statement and potential actions, no further details have been released as of Monday morning from Washington. In a most extreme case, effective Wednesday, June 4th, all material that has not entered the country and cleared customs would be subject to this additional tariff. It is likely that as the details emerge this week, there may be some grace period for cargos to arrive, and deadlines may even be pushed given the tariff actions we have seen thus far this year, but the risk is very large. For now, it remains the top news to start the month and will likely impact the rebar market picture in the months ahead.
Domestic mills report tight inventories and have been able to maintain pricing because of it. There is no need to drop pricing if you are selling everything you can produce. The tariff news will likely only embolden their resolve to hold the line on pricing, and depending on demand, they may even look to try and make a move in the other direction. There is added capacity coming into the market in the second half of the year with the addition of 3 major mills. Their added capacity will likely offset a dwindling import supply, so in reality, any increase in tariffs would have a limited impact and likely only in the short term. Longer term, domestic supply will likely meet or even exceed the volume of imported rebar into the US. Mills will likely keep this in mind as they move forward.
Import will likely be put on “pause” to start the month. Numbers that had a little traction last week are likely to be taken off the table with the tariff announcement. Any import that is on the books but not yet produced will likely be put on hold. Cargo on the water will be at the mercy of the details forthcoming with the tariffs. Bottom line, long term, the tariff announcement at 50% and any pending increase will likely crush any import supply coming into the US.
On the scrap side, prior to the announcement Friday, most expected scrap to be sideways to slightly down, as mill demand for scrap was waning. Now, with a potential spike in overall steel demand pending, there becomes a chance that increased mill demand for domestic steel products will drive scrap demand up. It would not be surprising to see scrap go sideways or even increase before the end of the month, depending on how the week plays out.
All in all, a lot of moving parts to start the week and the month. We will continue to keep you posted.
