US domestic rebar and wire rod markets were steady this week as low demand for structural steel continues and anticipated inventory draw downs continue to limit new demand for long steel products, market insiders told SteelOrbis this week. Contacts report a growing level of perceived risk ahead of the November US presidential election, which is limiting interest in forward steel markets, they said.
Insiders say draw downs of existing inventories “on the ground” are important because taxes on stocks onsite will be assessed as of Jan. 1, they say. Sources said recently that many of their customers already have started to use up bulging inventory, limiting new spot market activity, and that as of November 1, few of them will be buying much new product to replace inventory draw down ahead of the new year.
“While we’re hearing lower domestic rebar prices out there for January in the $34.50-$34.75/cwt range, as of yet, nobody’s selling because few are willing to take the risk ahead of the US elections in November,” one rebar market insider told SteelOrbis. “They want to see who wins the election and whether their policies will be favorable to steel.”
In the weekly spot markets, domestic rebar on an FOB mill basis is assessed in a tighter range, though steady from seven days ago at $36.00-$36.50/cwt. ($720-730/nt or $794-805/mt), versus $35-37.50/cwt. ($700-750/nt or $772-827/mt) reported during the week of Sept. 16. New spot activity remains thin, with a noticeable lack of reports of continued mill discounting programs heard.
Weekly prices for domestic wire rod were reported unchanged at an average of $35.75/cwt., off $1.25/cwt., ($25/nt or $27.56/mt) from earlier $37.00/cwt SteelOrbis assessments.
Opinions remain mixed as to whether rebar and wire rod prices are likely to continue lower, as supplies on the ground remain high, contacts say. Also, little affect has been seen since the US Federal Reserve cut overnight lending rates by one-half point during the week of Sept. 16. The current rate is posted at 4.75-5.0 percent, and further rate cuts are expected in November, shortly after the US presidential election, market insiders said.
On a global front, concern about the potential impact that a pending US dockworker strike could have on the movement of steel imports and mostly containerized shipments from US East Coast and Gulf Coast ports was noticeably less this week, with many expecting any affects to be minimal, and the strike to be of limited duration.
“My contacts don’t expect that the strike will even occur because we have an approaching presidential election,” said one East Coast rebar market insider. “However, if it does happen, imports (of long steel) already are way off, so there will be a limited impact on US supply on the ground.”
Market experts said each day that the strike occurs could cause a backlog of 4-6 days for containerized cargo stuck outside ports, with the bill for lost goods and services estimated recently by analysts at JP Morgan in excess of $5 billion per day.
At last report, members of the International Longshoreman's Association (ILA) and the US Maritime Alliance remain at odds over wages and issues regarding port automation. The parties have until Sept. 30 to arrive at a compromise, otherwise a strike will commence on Oct. 1.