The domestic US plate market has experienced some drastic price changes from February to March, even though market leader Nucor has kept its prices stable on paper.
Domestic US plate prices had weathered the global economic storm better than most steel product prices throughout the majority of the fourth quarter, until prices decreased by double digit cwt. increments during December and January. Last month, SteelOrbis reported commercial grade plate prices in the range of $40.00 cwt. to $42.00 cwt . Now, the average price in the market fluctuates from around $34.00 cwt. to $36.00 cwt. ($750 /mt to $794 /mt or $680 /nt to $720 /nt) FOB mill for commercial grades (A36, base sizes, mill plate), reflecting a price decline of about $6.00 cwt. ($132 /mt or $120 /nt) in one month.
Over the last month, energy-related demand has continued to dwindle and many API pipe producers were forced to cut production and shut down facilities. Equally affected by the situation is the booming green energy sector, as many solar plants and wind mill projects have also been put on hold. Plates are primarily used on these projects and although the demand for plate has outlasted that for most other steel products amid this crisis, it seems to have finally collapsed, causing prices to plummet. Demand continues to sag, but the energy sector has perhaps the best chances of recovery in this sluggish market. A significant emphasis is given to green industries in the US stimulus package and mid-term prospects for energy needs from China and India are solid.
Plate makers are now eagerly waiting for the stimulus money to flow back into postponed projects and for oil and gas prices to recover some more. For those international traders who brought large shipments to the country before the collapse, conditions are pretty miserable. Big price drops prompted many problems ranging from phony claims to abandonment of cargoes. Many distressed cargoes are reported at the ports.
However, traders have informed SteelOrbis that spot prices are all over the board right now, and most buyers requesting decent sized orders will have the upper hand in negotiating discounts, both from traders and local producers, considering that most North American mills are still only operating at about 30 to 40 percent capacity. Both the import and domestic pricing trends continue to be down.
On the import side, foreign mills are finding it increasingly difficult to book any orders to the US. Domestic mills remain too aggressive and convenient for US buyers to consider purchasing steel plate from elsewhere. Considering the ongoing uncertain economic conditions and the importance of cutting down on lead times as much as possible, foreign plate mills may continue to struggle to export to the US for the foreseeable future. Nonetheless, most import offers are trending downwards and can be found in a range below most initial domestic offers, at as low as the high $20s cwt. to the low $30s cwt., but domestic mills will most likely be able to negotiate quick order deals that would not even make these low rates worth considering for most US buyers.
License data from the US Import Administration indicate that after import tonnage of cut-to-length plates increased from December to January, from 71,250 mt to 102,194 mt, the February total import tonnage decreased back down to 60,227 mt.
As for service center inventories, according to the most recent Metal Service Center Institute (MSCI) shipment and inventory report, daily shipments of plate tonnage decreased from an estimated 14,200 nt in January to 14,100 nt in February. This comes after daily January shipments increased from December, which was the first monthly increase since May 2008. Furthermore, the amount of time inventory stays in the warehouse before being sold increased from 4.0 months in January to 4.1 months in February, which again comes after January inventory decreased from December, which was the first such decrease since October 2008.