NEW YORK Activity in the
domestic reinforcing bar market continues to be tepid as
negative scrap sentiment deflates ordering activity and
construction projects remain slow to gain traction.
According to sources, buyers are
hesitant to order material amid market speculation that scrap
pricesand, hence, steel pricescould drop next month
amm, com, May 24). As a result, most appear to be
keeping their inventories slim, buying only what they need to
meet immediate requirements.
"If we went in and bought strong
thinking (scrap) was going up like a bastard and then it
dropped, wed be screwed," said a Northeast rebar
fabricator source. "We havent done any hedging because of
the uncertainty in this stupid market."
Buyers and sellers cited reports
that scrap export prices are at multiyear lows (
amm.com, May 22) and market chatter about lower
U.S. scrap prices in June as the major drivers behind recent
"Sharks smell blood in the
water," a Midwest distributor source said of rebar buyers.
"They sense the possibility of blood in the water; theyre
sensing the possibility of another scrap drop."
Rebar prices have held at around
$650 per ton ($32.50 per hundredweight) f.o.b. mill over the
past few weeks, down from $670 per ton ($33.50 per cwt) at this
time last month.
Meanwhile, rebar demand has been
patchy across the United States, with some regions seeing an
uptick in construction starts but others remaining
disappointingly slow, sources said. Market players in
California and Texas, for example, have reported relatively
robust demand, while construction starts in the Northeast and
parts of the Midwest appear to be somewhat muted (
amm.com, May 10).
"Things seem slow to me. When I
look at the calendar and whats normally occurring
compared to now, this is not good," a source at a Midwest rebar
fabricator said. "Theres pockets of business. Some places
are doing pretty well and others are just hurting."
However, more construction
contractors are expected to buy rebar as the weather improves,
with some sources reporting that trend may have already started
in some regions.
"The last couple of weeks since
the weathers picked up weve improved quite a bit.
Since late April, weve seen things pick up," said a
source at a rebar fabricator in the upper Midwest who had seen
a slow start to the year.
Orders have improved "a little
bit, but its nothing to brag about. Were still
pretty flat," the Northeast rebar fabricator source said. "I
think theres some changes coming, but weve got a
lot still that has got to be corrected."