Sluggish buying activity persists in US domestic plate market

Tuesday, 30 November 2010 02:27:57 (GMT+3)   -  

Spot prices in the US domestic plate market have trended sideways since our last report two weeks ago despite a growing number of price increase announcements.

Buyers are still employing a "buy only what you need" mentality and are only making purchases to plug holes in their inventories. Nucor's $1.50 cwt. ($33/mt or $30/nt) price increase announcement earlier this month did not result in any increase in spot prices, and additional $2.00 cwt. ($44/mt or $40/nt) price increase announcements made since our last report by Evraz, SSAB, and ArcelorMittal effective for all orders made after January 2, that cite "rising raw materials cost," left many service centers shaking their heads, convinced that the increases "won't, and simply can't, stick."

Most current transaction ranges for domestic plate remain at last week's levels of $39.50-$40.50 cwt. ($871-$893/mt or $790-$810/nt) ex-Midwest mill, although a number of buyers report having been successful at booking large tonnages at a $1.00-$2.00 cwt. ($22-$44/mt or $20-$40/nt) discount. Premiums on certain plate products appear to be diminishing, and one service center in the South claimed that some mills are "absorbing cutting fees on specialty items in an attempt to boost buying activity."

Inventories appear to be plentiful all around, and as with the past few weeks, smaller service centers in the South and the Midwest continue to make purchases from larger distributors at below mill prices. "Everyone is scrambling to find the best deal right now" explained one Midwest distributor. "No one is settling for mill asking prices."

Furthermore, according to the most recent data from the Metal Service Center Institute (MSCI), daily shipments from steel service centers in October were down 11.5 percent from September, after a 5.8 percent increase in September-over-August shipments. Monthly shipments of 292,900 nt were down 11.3 percent in October over the prior month, while monthly inventories were up to 2.8 months-on-hand, a sharp increase from the 2.5 months of inventory in September.

On the import side, Russia continues offering plate at approximately $36.00 cwt. ($794/mt or $720/nt) FOB loaded truck in US Gulf Ports, and has been increasingly successful at booking significant tons. Additionally, Brazil is competitively offering basic A-36 plate at approximately $36.00-$37.50 cwt. ($794-$827/mt or $720-$750/nt) FOB loaded truck in US Gulf Ports, and  rumblings have now surfaced that South Africa may be presenting some interesting offers to US buyers, and could become a larger player in 2011.

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