US domestic rebar and wire rod markets were steady to down this week as US scrap prices settled steady to lower for September, even as demand for construction-related steel products remains muted, market insiders told SteelOrbis this week.
Insiders said that while many sizable construction projects are on the books, many of them are being delayed for fear of purchasing materials in a bearish steel market.
“The markets are really not looking good because while there’s work out there in construction, people are holding back on starting projects until they know the outcome of the November US presidential election,” one Gulf Coast rebar dealer told SteelOrbis. “High interest rates and uncertainty has folks reluctant to buy construction materials right now for fear that prices will continue lower.”
Insiders said new buyers remain skittish as inventories of rebar and wire rod “on the ground” remain high with much of the previously-purchased supply priced at higher levels than what is currently available, as prices have continued to decline over the past several months.
“We’re in a steel recession right now,” the rebar dealer added. “Supply on the ground remains high, as we’ve been subject to eight months of declines in steel prices. As a result, no one wants or needs to lock in the price of steel (on a future basis), because it is likely that they’ll see lower prices if they wait it out.”
In the weekly spot markets, domestic rebar on an FOB mill basis is assessed $0.5/cwt. ($5/nt or $5.51/mt) from the upper end less at $35-37.50/cwt. ($700-750/nt or $772-827/mt), vesus the $35.00-38.00/cwt. ($700-760/nt or $772-838/mt) range reported the week of September 2. Insiders said the low end of the trading range continues to represent discounted mill pricing for those buyers able to lock in sizable transactions, while the top of the range represents higher US West Coast pricing.
“Nobody’s stocking up on inventories right now,” said another rebar market insider, when asked about the potential impact on steel imports and outbound US export scrap if an expected October stevedore strike by members of the International Longshoremen’s Association (ILA) at US East Coast and US Gulf Coast ports occurs. “Most of the people we’re talking to are expecting prices to maintain at current levels or decrease over the next three months.”
While the last strike occurred in 1977, industry reports continue to circulate that an October 1 strike is likely to occur at union-controlled port facilities, if issues with regard to automation and wages are not settled ahead of the September 30 deadline for the approval of a new union dockworker multi-year contract. The Biden administration said recently that it supports collective bargaining as the “best way” for American workers and employers to come to an agreement. “We’ve never invoked Taft-Hartley to break a strike and are not considering doing so now,” a source said.
“We don’t expect the strike to be a prolonged situation,” another rebar contact told SteelOrbis. “The strike is expected to only affect union-controlled port facilities, so if they have an option people will shift their supply to non-union ports or facilities. We don’t expect much affect in Texas, because they’re mostly non-union facilities, but the movement of supply in and around New Orleans could be shifted to the West Coast.”
Industry reports indicate about 43 percent of all US imports and billions of dollars of trade monthly flow through US East Coast and Gulf Coast port facilities.
Shipping company representatives interviewed by SteelOrbis said many shippers already have shifted the movement supply via rail to West Coast ports not subject to the pending port strike. The situation could get sticky, they say, with increased delays likely, if more congestion occurs in and around Chicago rail yard connections to the West Coast. Current delays for rail bound container “dwell time” for the ports of Los Angeles and Long Beach are currently estimated at 8-10 days across all ocean carriers.
On the domestic wire rod front, pricing on an FOB mill basis is assessed about $1.00/cwt. ($20/nt or $22/mt) less at an average of $37.00/cwt. ($740/nt or $816/mt), versus the $36.00-40.00/cwt. ($720-800/nt or $794-882/mt) range report for last week “depending on mill,” insiders said.
“We’ll probably see some more action in long steel markets after the election,” said another rebar dealer. “But prices are expected to remain pretty much where they are for the rest of the year, because of high levels of supply on the ground.” He added, “Nobody needs to do futures right now, because prices continue to fall, and inventories are way up.”