US domestic plate producers have announced another price increase effective for February shipments, and most buyers feel that it will be widely accepted in the market.
Steel plate was one of the stronger products in 2007, and it looks as if it may hold its good standing in 2008 as well. When compared to other steel products, demand for plate is stronger. While other steel products are typically used in housing-related applications, plate demand has continually remained strong as its applications are more commercial. The energy sector is the main sector currently boosting plate demand, providing new line pipe projects that have been coming on stream. Other markets like shipbuilding, bridge building, and rail car construction are also on the strong side.
Despite the relatively strong demand, the most recent price increase is said to be strictly scrap price-driven. After domestic mills boosted prices in late December by $1.00 cwt. ($22 /mt or $20 /nt), domestic plate prices rose to the $41.00 cwt. to $42.00 cwt. ($903 /mt to $926 /mt or $820 /nt to $840 /nt) range. With the rising cost of raw materials, buyers almost had no choice but to accept the announced increase. In the New Year, mills made further announcements of price increases effective with February shipments, with offers rising by $1.50 cwt. to $2.00 cwt. ($33 /mt to $44 /mt or $30 /nt to $40 /nt). Most buyers feel this price increase will be fully accepted in the market.
The latest announced price increase will bring domestic standard sized plate to the range of $42.50 cwt. to $43.50 cwt. ($937 /mt to $959 /mt or $850 /nt to $870 /nt) FOB mill for commercial grades A36 base sizes coiled and cut-to-length plate in the Gulf region.
Now that scrap prices are up significantly, new plate increases are more likely to come and the pricing trend therefore is strongly up for March shipments.
Heat-treated plate, grade A514, will also be seeing an increase from domestic mills. In addition to higher scrap costs, heat-treated plate is in high demand as there are fewer producers than for A36 plate. Also, in the past few months, domestic mills have been seeing increased orders from the military, so supply is a little tight. Prices are expected to increase again late first quarter, this time by $2.00 cwt. ($44 /mt or $40 /nt).
As for the import market, things have been rather quiet. The Russian and Ukrainian offers that usually surface have been absent from the market and buyers say they are not expecting to hear of many in the near future. East Coast buyers claim there are no offers from any region, which may simply translate to no reasonable offers.
For late February or early March arrivals there are some South Korean offers afloat which are about $1.00 cwt. higher than last month. Offerings from South Korea to the West Coast are ranging between $41.25 cwt. to $42.25 cwt. ($909 /mt to $932 /mt or $825 /nt to $845 /nt) FOB West Coast. For the next shipment, expected to arrive early second quarter, offering prices from South Korea are expected to increase by another $2.00 cwt. approximately.
Data from the US Import Administration show that worldwide imports of cut-to-length plates totaled 99,367 mt in December 2007 with Canada, Malaysia, and Thailand as the top three exporters to the US with tonnage totaling 27,581 mt, 22,061 mt, and 16,165 mt respectively. For plates in coils, worldwide imports to the US totaled 67,526 mt with Canada, Netherlands, and New Zealand as the top three exporters with tonnage totaling 48,054 mt, 5,579 mt and 3,484 mt respectively.