Month End Rebar Recap
As we close October in the rebar market, there seem very few signs of a slowdown. Although the calendar would suggest that things should be starting to pause and take a breath, demand activity appears to remain very solid while supply remains stubbornly tight at domestic mills. Rumors of some tariff relief on steel products prior to the midterm elections have not materialized, and as such, imports remain relatively nonexistent and not able to help rebar supply. Domestic mills continue to supply barely enough to service the needs of the market with regional disruptions, which serves to only help validate the recent pricing increases from last month.
Domestic mills continue to be the main supply driver in the US market. While the East and Southeast regions report a stronger supply picture, the rest of the country has holes on several items and reports longer lead times than traditional Q4 lead times in the US rebar market. Not surprisingly, the $40/ton price bump has held out West, and most of the East has fully accepted the $30/ton increase. In fact, rumors swirl in the market about further scrap bumps moving forward, with mills potentially trying to take advantage of it. Still, we are heading into the slowest period of the year with pricing already at historical highs, so overly aggressive pricing moves could potentially ruin a very good current market for domestic mills.
On the import side, high freight and higher raw material costs continue to hold foreign mills at a disadvantage selling to the US market. Rumors of tariff relief, especially for NAFTA countries, circulated last month, but at the present time, nothing has materialized. Any foreign mill trying to import their product to the US mills is facing a 50% hurdle to do so. Few mills can even come close to matching or beating US domestic pricing, and not surprisingly, imports are only finding traction if and when domestic inventories run out and fill-in tons at a premium are being utilized. Look for imports to remain stressed until either tariffs are relaxed or the US price becomes so high that foreign mills can sell at the tariff-inflated price.
On the scrap side, most are expecting another bump in November. The most common prediction is $20/ton up from October. There is discussion that the October scrap ended firmer than expected, so the November bump may not quite hit $20/ton, but that opinion seems to be the minority. If the move is relatively minor, mills may give pause on increasing, given the time of the year and the position that imports are in. If the price remains stable, the market is less likely to open the door for large-scale Q1 imports. Scrap is scheduled to post late this week.
We will continue to keep you posted on developments in the rebar market. In the meantime, have a great start to November.
