NEW YORK The rebar market is showing signs of life as demand grows ahead of April construction, with vendors reporting higher volumes, increased activity and a bump in transaction prices of between $20 and $25 per ton, depending on the buyer.
"(The market) is really good," a source at a Midwest rebar distributor said. "Its very strong right now."
A mill source agreed that demand appeared to be on the rise. "Its been a busy month, volume has been pretty good and it has been a little bit better" than February, he said.
With order activity said to be rebounding, most sources confirmed that the announced rebar price hikes of $25 per ton ($1.25 per hundredweight) effective with April 1 shipments were finding partialand sometimes completesuccess (amm.com, March 13).
"The full increase hasnt been implemented yet but Ive gotten basically $20 of $25 on it now," the rebar distributor source said.
In addition to an apparent uptick in demand, higher March scrap prices also are lending the announced rebar price increase some support, sources said. AMMs consumer buying price for shredded automotive scrap in Chicago rose $35 in early March (amm.com, March 7), although early indications suggest that that strength could abate in April.
"Rebar is a product that doesnt have a lot of variable margins. Its very closely tied to its raw material," said a source at a second mill. Putting a portion of Marchs shredded automotive scrap uptick into the sales price "is legitimate. Theres good reason for the price to stick and not slide," he said.
Market participants reported most transactions at around $690 per ton ($34.50 per cwt) f.o.b. mill this past week, with some deals already including the full $25-per-ton increase but other players still squeezing in last-minute transactions at prices closer to the $670-per-ton ($33.50-per-cwt) level.
Downstream demand likely will be strong enough for mills to hold onto their new prices, sources said this past week, citing traditional seasonal trends. Demand for rebar has already picked up in states that have seen more consistent warmer weather, but construction projects continue to lag in regions that still see nighttime frosts, sources said.
"Thats kind of whats holding it back for us the most," a source at a Midwest rebar contractor said of the weather. "Once it hits the 40s and mid-50s, itll take off."
Many buyers in warmer states rushed to place orders before the $25-per-ton uptick took hold, sources said.
"They know what they buy today will still be cheaper than what they buy next month, so theyre hedging their bets," the rebar distributor source said. "Youve got the cash; why not bring it in a few weeks early and not have to worry about stock?"
But buyers in colder regions were holding off until there are some more definite signs of good weather.
"Historically this would be an extremely busy week at the mills because people would try to pull forward as many orders as fast as they could to beat the increase," a source at a northern service center said. "The fact that its not busyIm leery that its going to hold."