The price hike in Chilean domestic steel rebar announced by the country's steelmakers in late July has consolidated through August, with all orders placed this month subject to the new value, several sources said Monday.
Platts assessments shows rebar A630 currently at Peso 385,000-398,000/mt ($546-$565/mt) delivered in Santiago, excluding the mandatory 19% IVA tax. By end-June, domestic rebar price bottomed to as low as Peso 375,000/mt. Buyers several times were able to force producers to drop price hikes by not buying at the higher prices. But it didn't happen with the July price increase as demand for the long steel product is considered strong.
"The reform approved by the government, raising taxes for new housing projects valid from 2016 on, forced construction companies to accelerate their projects," said source at a steel processor who has not yet bought in August. "This boosted rebar use."
The processor has firm offers at Peso 398,000/mt -- up 7% over July's level, the source added.
"Moreover, rains came later than usual this year, which enabled projects to run external stages [in which rebar is employed] for a longer period," added another buyer, who also reported a 7% hike in mills prices. He purchased around 700 mt through the month at Peso 383,000/mt.
Another distributor source acknowledged the 7% price increase started in late July, but he couldn't confirm what was the new value.
"For the near future, prices should be stable because although the currency exchange rate is still increasing, international prices are going down," said a trader seeing prices in a Peso 390,000-400,000/mt range. "Also, activity may be slow until we have a decision from the government regarding the proposal of a labor reform, which is generating many uncertainties and braking activity."
Chilean domestic rebar market is supplied by two companies: CAP Acero, currently operating only one of two blast furnaces and producing up to 700,000 mt/year of finished steel, and Gerdau, a 530,000 mt/year rebar, bar and rod producer.
Source: Platts
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