Rebar under pressure from domestic competition

The two long products started having trends of opposite direction, rebar is weak due to heavy discounting from domestic mills and wire rod stronger due to production problems and less domestic output.  

In fact, most wire rod mills announced $20 / short ton price increases.  There wasn't a Chicago shredded scrap increase in October so this isn't a push supported by raw materials.  The price increase comes during normally a very soft period for demand, namely fourth quarter.  One of the major mills in the US temporarily halted production, while it was supposed to come back to production in October, the restart is now extended to November.  Liberty Steel cited challenges of wire rod market and opted to halt production to limit losses.  Liberty may wait until the wire rod market improves significantly to come back online, and buyers worry the stoppage may last much longer than one or two months.  This mill is one of the largest wire rod producers in the US and absense of the supply will eventually be felt stronger.  However, the remaining supply from the US and Canada seem to have taken care of the immediate hole the shut down has left the US market.  

Considering $20 /short ton is a soft attempt to increase pricing, we may not see an increase yet in certain regions but the announcement, coupled with the Liberty stoppage has put the pricing trend firmly up.  Wire rod prices have been soft for almost a year so this was a welcomed change.  Some buyers that are confident of the pricing trend, started looking at overseas imports, trying to hedge their prices and volume requirements.  

Rebar market is quite the opposite.  In their earnings call, mills have talked about that they have overestimated the demand will come from the infrastructure bill.   Both Nucor and CMC scaled back from their forecast.  The lack of demand get the mills compete fiercely and keeping the prices depressed.  Some domestic offers are now even below the import level.  New imports for Q1 are hardly feasible with so much cheap domestic rebar offers out there.