US domestic rebar markets were stable and wire rod markets were lower this week amid scant new finished steel demand, as many customers defer new purchases in order to begin the process of drawing down inventories in storage ahead of the new year, market insiders told SteelOrbis this week.
“Starting in November, many customers will hold off on ordering to show less inventory at the end of the year, and not have to deal with property tax in some counties,” a long steel market insider told SteelOrbis. “Harris County in the Houston area will tax any property that is on the ground by year’s end.”
In the weekly spot markets, domestic rebar on an FOB mill basis is assessed steady at $35-37.50/cwt. ($700-750/nt or $772-827/mt), versus the $35.00-38.00/cwt. ($700-760/nt or $772-838/mt) range reported earlier. 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 in many cases represents higher US West Coast pricing.
Weekly prices for domestic wire rod were reported at an average of $35.75/cwt., off $1.25/cwt. ($25/nt or $27.56/mt) from recent $37.00/cwt. SteelOrbis assessments.
Opinions remain mixed as to whether current rebar and wire rod prices are closer to bottom or whether further price declines are likely in the coming weeks, as supplies on the ground remain high, contacts say.
“I don’t know if we have hit bottom yet,” the insider said. “On the one hand, I am optimistic as inventories will have to be replaced at some point. On the other hand, there is a narrow window for that to occur as November is quickly approaching.”
Some rebar insiders told SteelOrbis recently that today’s half-point rate cut from the Federal Reserve (Fed) could also spur additional construction-related activity, and potentially boost recent stagnant demand for structural steel products. The Fed overnight lending rate, which remains at a 23-year high, was reduced to 4.75-5.0 percent.
The Fed has signaled at least one rate cut this year, but more are likely including another on November 7, just two days after the US presidential election.
On the construction front, insiders said that while many sizable construction projects are on the books, many of them were being delayed for fear of locking in steel pricing even as prices continued to drop. Others have delayed buying ahead of the fast-approaching US presidential election, until they know whether new policies will be favorable to steel.
On a global front, market insiders remain somewhat concerned about the potential impact on steel imports and mostly containerized shipments, such as 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. Bulk shipments are not expected to be affected much, experts say.
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.
Most long steel insiders don’t expect the strike to be a prolonged situation, and it is expected to only affect union-controlled port facilities, however, experts claim each day a strike occurs takes four to six days to clear the backlog of supply at facilities. Insiders say those that have the option will shift 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,” a source said.
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 recently by SteelOrbis said many shippers already have shifted the movement of supply via rail to West Coast ports not subject to the pending port strike. Delays could increase as more congestion occurs in and around Chicago and Canadian rail yard connections to the US West Coast. Current delays for rail bound containers, so-called “dwell time” for the ports of Los Angeles and Long Beach, are currently estimated at nine plus days across all ocean carriers, port reports indicate.