NEW YORK Most buyers say they expect to see no decrease in steel long product prices for the third month in a row, despite a slight softening in ferrous scrap prices in the key Chicago region.
"(The mills) will announce sideways next weekyou can count on that," a source at a Midwest reinforcing bar fabricator said.
Mills raw material surcharges on long products often move in tandem with scrap prices, particularly shredded automotive scrap in the Chicago market, which settled down $9 to $377 per gross ton on Feb. 7.
But buyers said the $9-per-ton softening in scrap prices might not be dramatic enough to precipitate a softening in steel mill selling prices as well.
"We dont yet know how the mills will react (to scrap softening) but I suspect they will resist lowering prices," a wire rod purchaser said.
A source at an Ohio Valley-based rebar fabricator agreed that most buyers were not anticipating a simultaneous steel price drop. "Any time (mill prices) can (avoid being) moved down, I think they tend to do that," he said.
The expected stability in wire rod and rebar prices despite a drop in scrap tags comes at a time of increasing optimism about demand in the construction sector.
Housing starts were at a seasonally adjusted annual rate of 954,000 units in December, up 12.1 percent from Novembers revised estimate and nearly 37 percent above December 2011, according to U.S. Census Bureau data, and industry leaders largely predict demand will continue to improve in 2013 (amm.com, Feb. 5).
"The thing is that demand is picking up. I think it would be risky for the mills to decrease their prices at this time. Were facing a little better demand on the West Coast at this time," a source at a West Coast service center told AMM. "If demand is starting to pick up at the mills, it doesnt make sense to drop the price."
Grade 60 No. 5 rebar held steady at around $34 per hundredweight ($680 per ton) f.o.b. mill in January, while mesh-quality low-carbon rod traded at $33.50 per cwt ($670 per ton).
Mills have not yet announced their February price changes, but with scrap settling Feb. 7 most buyers expect mills to update published prices next week.