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 buyer caution.
"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."