US domestic rebar and wire rod markets were little changed this week as domestic mills continue to dominate new trade with offers of customer-specific discounts, market insiders told SteelOrbis this week.
With such a small number of mills dominating the domestic rebar landscape, independent fabricators claim some mill-owned fabricators are becoming “bad players” with their ability to offer sizable discounts to secure sales of minimal new rebar and wire rod traceable tons.
And while new trading activity still remains muted with continued low construction-related demand, pricing is quoted in the $35.00-$38.00/cwt. range ($700-760/nt or $772-838/mt) on a delivered to customer basis, little changed to slightly higher than one week ago. The low end of the range of quotes represents discounted mill pricing for those buyers able to bring sizable transactions to the trading table, market insiders said.
“Generally speaking, the rebar market (stinks),” said one long steel market insider. “There’s an ongoing bloodbath between Nucor and CMC, and as a result, independent fabricators are becoming collateral damage.”
Just last week, mill discounting saw domestic rebar trade $2.00/cwt. less ($40/nt or $44/mt) at $34.50-36.50/cwt. ($690-710/nt or $761-783/mt) on a delivered to customer basis with larger orders once again accounting for the lower end of the trading range, market insiders said. Some market insiders predicted domestic rebar pricing could continue to decline to $30/cwt. ($600/nt or $661/mt) if domestic scrap prices fail to rebound from recent lows.
“Even though some mills have claimed that scrap prices were up, that’s not the case,” one Midwest rebar dealer told SteelOrbis recently. “Mills are not pushing prices up for finished goods, and most are willing to negotiate discounts with customers, especially with those with big orders in hand.”
Mill battles for customer orders continued last week as US West Coast mills PSG Steel and CMC Steel were reported to be infighting with each other over customer orders, offering significant discounts to secure the movement of August tons after August scrap failed to increase as expected.
“It clearly has not bottomed out yet,” a rebar insider said recently of domestic rebar prices. “If scrap does not go up, prices could fall as low as $30/cwt. in the short term. Wire rod prices increased about a month ago, but I’ll bet that those increases fail to stick.”
Continued predictions of continued low rebar pricing could prove true, especially if recent early claims about lower September domestic scrap pricing manifest as buyers emerge during the September scrap buy cycle which is expected to begin later in the week of September 2.
In the domestic wire rod market, pricing is discussed on a delivered to customer basis at $37.50-$38.00/cwt. ($750-760/nt or $827-838/mt), unchanged from seven days ago, even as trading remains muted.
Rebar dealers are hopeful that September’s expected rate cut from the Federal Reserve could help long steel demand by jump starting construction-related activity.
“Some customers are expecting that the market might improve once the government announces a drop in interest rates to activate the economy no later than September,” the rebar dealer said. “If not, they do not expect a good rest of the year, and prices might drop further due to a slower demand.”
Financial market analysts claim there’s a 71.5 percent chance for a quarter-point rate cut from the Federal Reserve during its next meeting on September 17-18.