US domestic plate market strong as ever; few import offers emerge

Monday, 02 June 2008 10:54:54 (GMT+3)   |  
       

US domestic plate prices have been going up monthly, and July will be no different. Domestic producers have announced more increases for orders shipping the last days of June and beyond, pushing prices over the $1,300 /nt mark. 

Soaring scrap prices and strong demand have forced domestic plate producers to continually up their prices this year. The most recent set of increases by the major plate mills have boosted A36 plate prices into the mid $60's cwt. Nucor set the bar, increasing its plate prices by a total of $270 /nt ($13.50 cwt. or $298 /mt) for June alone. The increase took place in two phases, and as of June 1 the company's spot market price for coiled and cut-to-length plate is reaching $66.50 cwt. ($1,466 /mt or $1,330 /nt). Other major mills followed and boosted their prices up considerably for shipments taking place June 29 and beyond. All domestic mills are citing rising raw material costs paired with strong demand as their reasoning behind the increases. 

Currently, domestic plate prices are in the range of $65.00 cwt. to $66.50 cwt. ($1,433 /mt to $1,466 /mt or $1,300 /nt to $1,330 /nt) FOB mill for commercial grades A36 base sizes coiled and mill plate in the Gulf region. This represents multiple increases totaling $470 /nt ($23.50 cwt. or $518 /mt) since the beginning of this year. While prices were going up in leaps and bounds, there was a lot of confusion about the spot prices. Most mills now implement a raw materials surcharge, which is typically based on scrap prices, and the price is effective at the time of shipment. 

Buyers fear that prices will head up even more going forward. Busheling scrap prices have been rapidly rising, and there are talks that more increases are coming, possibly in the area of $100 /long ton, in early June. Coupled with strong demand, a scrap increase may push plate prices into the $70's cwt. later this summer. 

Most agree that demand for larger structurals and plate is very strong. The energy market and the industrial construction market are dominating the supply. Although these markets are booming, demanding high volumes of steel plate, buyers question how long this ride can last. Already there are signs that the overheated flat rolled market is cooling off. 

The plate situation is certainly different from the markets for other flat rolled products. Firstly, the supply is relatively tight, due to the strong demand as well as the lack of imports. Freight rates are still on the high side, and the offshore offers that are surfacing aren't very attractive when considering lead times. The gap between the import offers that have surfaced and the domestic mills' prices isn't wide enough for buyers to make the risky offshore purchase.

A few import offers have surfaced, mainly to the East Coast. Russia and Ukraine have offered A36 grade plate at approximately $64.00 cwt. to $65.00 cwt. ($1,411 /mt to $1,433 /mt or $1,280 /nt to $1,300 /nt) FOB loaded truck in the Gulf Coast and East Coast.

Offers from Thailand for A36 grade plate are found to be in the same range, $64.00 cwt. to $65.00 cwt. ($1,411 /mt to $1,433 /mt or $1,280 /nt to $1,300 /nt) FOB loaded truck US South East Coast. Those offers are for narrower width plate, however. 

All import offers have a short validity, high prices and very few interested buyers, often disappearing shortly after being offered.

Data from the US Import Administration show a significant decline in plate imports in recent months. For cut-to-length plates, worldwide tonnage to the US decreased by more than half from March 2008 to May 2008. In March, tonnage totaled 109,505 mt. In April, tonnage totaled 80,334 mt and fell to 50,413 mt in May (data collected through May 28th). A similar pattern was seen for plates in coils. In April, the US imported 101,929 mt, while in May only 49,521 mt of plates in coils were imported. Exports have shown increased activity however. For plates cut-to-length, when comparing March 2008 with the same month of the previous year, export tonnage was up approximately 36,700 mt.


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