While some US distributors and service centers have heard nothing but crickets in the wide flange beam (WFB) market lately, others have enjoyed brisk business. However, both can agree that demand has a long way to go before reaching levels that will do more than just keep the market afloat.
Even though the current 24.9 percent unemployment rate in construction hasn't improved or worsened in the last month, the residential construction sector has been experiencing a modest recovery, and commercial construction is also picking up a bit; nonresidential building jumped 6 percent in March, according to statistics from McGraw Hill. Stimulus-funded infrastructure projects have not materialized quite yet, but many commercial construction projects that were previously on hold have recently been released. However, they are smaller jobs, rather than major projects such as strip malls and "big box" stores that have the potential to substantially improve the market.
In reality, most WFB buying activity in the last month can be attributed to restocking ahead of price increases, which is not considered "real" demand or indicative of market stability. While monthly shipments of structural products in March reached the highest level since June 2009 at 238,500 nt, month-ending inventory levels also increased (555,700 nt in March compared to 554,400 in February), according to the latest MSCI Metals Activity Report. April data should show a slight decrease in inventories, after buying slowed down following the early-April mill price announcements.
Scrap pricing was predicted to rise until at least mid-summer, and when it took a surprising sideways move earlier this month, mills reacted with neutral raw material surcharges (RMS), effectively leaving transaction prices for structural products unchanged. Therefore, domestic mill offers for WFB remain at $38.50 cwt. ($849/mt or $770/nt) ex-mill for ASTM A992, W10 x 10, W18 x 6, and W24 x 7. However, in order to move product, mills have been heard to make deals for up to $1.50 cwt. ($33/mt or $30/nt) less than listed prices. It is likely that in the event of scrap pricing trending downward in May (as reported by SteelOrbis earlier this week), mills will lower RMS for beams but raise the base prices, keeping overall pricing stable.
Raw material prices have also affected the import market; rising scrap prices overseas have raised WFB prices to unattractive levels. US distributors and service centers get most of their supply from domestic mills, but some did secure beams from Europe (and Korea for West Coast buyers) when prices were still relatively lower. The months-ago buying spree is reflected in current import levels, which surged in March.
According to the latest import data from the US Import Monitoring and Analysis System (SIMA), 11,824.0 mt of WFB were imported to the US in March (license data), a significant increase from February levels of 2,221.3 mt. And even though there is still a week left in April, license data already show import levels of 17,328.5 mt for this month.
Korea and Luxembourg, which had reduced tonnage levels in February, regained their status as major imports of WFB to the US with levels of 6,918.5 mt and 3,840.5 mt, respectively. Additionally, preliminary April levels already show increased tons for both countries. Spain stayed quiet for WFB imports, with only 9.7 mt in March compared to 10.2 mt in February. However, Germany has re-entered the import market this month, with April levels already at 2,914.8 mt, compared to 18.5 mt last month.