Mexican rebar and wire rod see diverging trends in winter Optimism was high in the Mexican domestic wire rod market in mid-November, as local prices soared by $60/mt to reach $779/mt ex-mill. e boost was largely attributed to the announcement of the “Guerrero Plan”—President Enrique Peña Nieto’s proposal for the reconstruction of houses, buildings, roads and infrastructure damaged by hurricanes Manuel and Ingrid. However, the trend was not shared with the Mexican
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rebar market, as extensive oversupply puts pressure on prices. Rebar prices at the time of wire rod’s boost were $636/mt ex-mill, reflecting a $65/mt plunge from prices two weeks before. By many accounts, rebar producers had an idle capacity of 2.5 to 3 million tons of rebar. Within the month, Mexican wire rod prices continued to increase, this time by a more moderate $15/mt. Rebar prices, meanwhile, continued to decline, decreasing by $15/mt in a matter of weeks. Despite the oversupply situation, sources told SteelOrbis that if energy reforms and other policies came into effect to further boost the construction industry, the increase in demand could overcome supply issues. Just weeks later, Mexican rebar prices finally reversed trend, jumping $40/mt to reach the level of $661/mt ex-mill. Wire rod prices also stayed firm, increasing by $20/mt in early December and $6/mt in mid-December. As the year came to a close, rebar prices remained stable—while the final weeks of the year were marked with very low ordering levels, construction industry sources told SteelOrbis that 2014 would be a year of great opportunity for their sector, in both public and private activity, and Mexico would soon be among the top 20 countries in the world for competitiveness in infrastructure. Turkish rebar mills start 2014 with focus on their local market With the US dollar standing at 2.08 against the Turkish lira as of December 19 and Turkish producer Icdas’ upward rebar price revision following the decision by the US Fed to cut back on its monthly bondbuying program, buying activity increased in the Turkish domestic rebar market. Buyers accelerated their purchasing activity in the belief that prices would increase further. Meanwhile, local mill Kardemir received increased demand on December 19, and sold approximately 37,250 mt of rebar in total in its domestic sales, which were opened in December 27 at the price level of TRY 1,182/mt ($568/mt) ex-works, excluding VAT. As SteelOrbis heard from market sources, Turkish rebar export offers increased by only Volume 7; Issue 1
$5/mt on the lower end from $585-$590/mt FOB on actual weight basis as of December 20. Given the increased strength of the US dollar against the Turkish lira, with the exchange rate at 2.09, local prices were revised upward and activity accelerated, providing support for a slight increase in export offers. In addition, stronger raw material prices also provided support for mills’ rebar export prices. Meanwhile, an Iskenderun-based Turkish steelmaker sold approximately 35,00040,000 mt of rebar in the 51st week of 2013 at the price level of $595/mt ex-works to Iraq, where activity started to slow down over the week. In the meantime, due to the easing of international sanctions on Iran, the country increased its production and started to give rebar offers at around $560/mt FOB on theoretical weight basis for the Middle East and North Africa, which were the target export markets of Turkey, resulting in fierce competition in the region. is situation impacts the improvements on the export side for Turkish mills. In the 51st week of the year, SteelOrbis learned from market sources that mesh quality wire rod export offers from Turkey remained unchanged on weekly basis at $590-$595/mt FOB. Demand was still reported to remain sluggish in Turkish wire rod suppliers’ export markets and purchasing activity in these markets was slowing down further ahead of the approaching New Year and Christmas holidays. In the meantime, the unwillingness of scrap suppliers to reduce their prices provided some support for Turkish wire rod export offers, despite the lack of demand support. Spot prices in the Turkish domestic rebar market were trending sideways as of January 8. Local mill Kardemir’s domestic rebar sales, which were opened on January 7, at the price level of TRY 1,255/mt ($576/mt) ex-works, excluding VAT, attracted no demand so far. Meanwhile, the fluctuating trend of the Turkish lira against the US dollar impacted local demand negatively. Most producers reduced their production levels, which will likely decrease the overall volume of mills’ sales. In the meantime, Turkish steelmakers were focusing on their local markets due to the lack of improvement on the export side.
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els and order activity stable. e next “bite” would likely come in the last days of the year, although whether Nucor would go for a third $10/nt in a row or a more ambitious— and equally attainable—$20/nt remained to be seen. Until then, spot prices lifted into the range of $33.50-$34.50 cwt. ($670-$690/nt or $739-$760/mt) ex-mill. As for imports, Portugal raised CFR offers to traders by about $0.50 cwt. to $32.00 cwt. ($640/nt or $705/mt) DDP loaded truck in US Gulf ports, with new offerings from Taiwan coming in around the same level. Even Greece and Egypt were in early talks with US-based traders, although Greece’s slow, methodical initial processes meant Greek rebar wouldn’t be on the US radar until well into 2014. Egyptian mills, on the other hand, were looking to offer January production to the US, and while prices were not yet set, traders expected they would be on the upper level of the new import rebar source spectrum. e year came to a close without another US domestic rebar price increase, which led some to speculate about the market. Despite the boost from months of uptrending scrap prices, US domestic rebar mills touted strong demand as the primary driving force behind their continual, if moderate, increases in rebar transaction prices. However, some sources told SteelOrbis that certain large distributors were able to book orders under $33.00 cwt. ($660/nt or $728/mt) ex-mill in late December. End-use demand was decent and expected to strengthen as the winter months give way to construction-friendly spring, but sources pointed to imports still flowing into US ports as the main detractor from US domestic mill demand.