With construction activity down by about 3% this year, demand for carbon steel reinforcing bar is down by 6.5%, yet the rebar sales-price average of $867/ton in May is higher than some analysts had expected. Now, because of still-high scrap prices, Nucor is seeking to raise rebar prices to $920 for deliveries in July from $885 for June deliveries.
Nucor bases its scrap surcharge on shredded scrap, which has risen to $540/gross ton in Chicago. “Higher scrap costs translate into higher steel prices,” says analyst Michael Gambardella at J.P. Morgan Securities. Analyst John Anton at Global Insights suggest that prices (now 76% higher than January 2007) are being supported by high input costs, a weak dollar, low imports and thin inventories. “The increases will stick until inventories begin to rebuild late in the third quarter of 2008, followed by a rapid decline at the end of the year because of weakening demand,” he forecasts.
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