February  9, 2003 

REBAR PRICES SURGE
(On the Back of Global Price Rise)

Rebar prices have increased an unprecedented 20% in the past month due to the tightness in billet supply which is the raw material for rebars. This was exacerbated by supply uncertainties as some international traders have opted to renege on previously committed contracts. At least two international traders have unilaterally moved for renegotiation of contracts while one trader has even opted to delay the issuance of contracts for previously committed volumes. The uncertainty in the willingness of the traders to comply with contractual obligations have contributed to price volatility and a sharp increase in domestic rebar prices as local steel mills cannot pin down their costs.

Furthermore, international scrap prices have increased substantially by as much as USD20/mt since December 2002. This has contributed significantly to the firming up of billet prices which as of today stands at USD 275/mt or a full USD 20/mt from only two weeks ago and a significant increase from USD 225/mt during the last week of November 2002.

Demand from South Koreas, Taiwan and the Middle East continue to hold up. Buying from China will also figure prominently when the Chinese return from their traditional New Year holidays.

Meanwhile the peso continues to weaken against the dollar breaching the psychological level of P54 to USD1 at one point before stabilizing at P53.94 to the dollar.

In view of the above factors, there is little chance for a rebar price decline and the likelihood of further increases. Only the absence of active buying from China can slow down or possibly reverse the current trend.