NEW YORK A sideways scrap market and continued lethargy in the construction sector have kept prices for steel long products largely flat this month, sources said, noting that the approaching debt ceiling in February is also serving to keep some would-be buyers out of the market.
"It looks like January will be an average month and there seems to be a lot of indecision," one rod buyer said. "No one is making any long-term commitments, and were looking at the late-February debt ceiling as the big problem that a lot of people have. Until this gets resolved, many small businessmen are not doing anything."
Both wire rod and reinforcing bar (rebar) demand has been sluggish in the first few weeks of the new year, market players said. As a result, prices are steady with mesh-quality low-carbon wire rod prices at around $33.50 per hundredweight ($670 per ton) f.o.b. mill, industrial-quality low-carbon rod at $34 per cwt ($680 per ton) f.o.b. mill and rebar at $34 per cwt ($680 per ton) f.o.b. mill.
"We have not seen activity," one rebar buyer said. "People are betting on things slowing down, so theres no incentive to buy anything now."
Also contributing to the flat long products pricing is a lack of volatility in the ferrous scrap market, which settled sideways in January for the second consecutive month (amm.com, Jan. 10).
But while wire rod and rebar demand remains slow as buyers wait until the weather thaws before making bigger purchases, a possible spring pickup in building rates could jolt some life back into the lackluster sector, sources said.
"People are on the balls of their feet wondering whats going to happen," according to a second rebar buyer. "(The year) is starting off a little sluggishly."
Specialty wire rod fabricators who supply the automotive industry have a rosier outlook on the market, saying that the auto industrys relative strength compared with the construction market made it a more attractive target. Several auto companies, including General Motors Co., Detroit, and Toyota Motor Sales USA Inc., Torrance, Calif., have outlined plans to boost U.S. capacity this year (amm.com, Jan. 17).
"(The auto industry) was the first in (to the recession) and the first out," a second rod buyer said. "Business is OK because, fortunately, were auto-dependent."
But outside of the auto market, both wire and rebar buyers predicted the sluggishness would continue, with modest and sporadic orders dominating the market until scrap moves or construction picks up again.
"When I look at the mills and I look at their lead times being so short, I promise you every steel mill is struggling with their order book," the second wire rod buyer said.