June Rebar Market Update
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.
Have a great start to the week.
