Following the $40/nt ($44/mt or $2.00 cwt.) August wide flange beam (WFB) price increase announced by Gerdau Ameristeel, it is expected that other US WFB mills will also increase prices for August shipments despite the poor demand; however, there is some uncertainty as to the amount that Ameristeel's peers will raise their numbers.
To recoup some of the $60 /nt ($3.00 cwt. or $66 /mt) that US benchmark shredded scrap prices increased in July, longs minimill, Gerdau Ameristeel, announced to customers late last week that it will be increasing published prices on WFBs, amongst other longs products, by $2.00 cwt. ($44 /mt or $40 /nt) on shipments beginning August 1. Nucor-Yamato, normally the WFB pricing leader, has yet to make its official pricing announcement.
The consensus amongst distributors seems to be that Nucor will not announce the same $2.00 cwt. ($44 /mt or $40 /nt) increase as Ameristeel, primarily to retain its identification as the pricing leader. So, that begs the question of how much Nucor will raise its August WFB prices.
In a market with at least some signs of increasing demand, a full $3.00 ($66 /mt or $60 /nt) match of the increase in the scrap surcharge would not be out of the question; but demand for WFB just hasn't shown much improvement. Furthermore, there is early discussion about the possibility of scrap prices taking a slight step backwards over the next month. In light of the weak demand and uncertain scrap trend, many distributors believe that Nucor, within the next week, will announce an increase of about half of the July shredded scrap price increase, raising WFB prices by about $1.50 cwt. to $1.75 cwt. ($33 /mt to $39 /mt or $30 /nt to $35 /nt). Steel Dynamics Inc., the other major US WFB producer, is likely to follow Nucor's lead with August beam pricing.
Prior to any August hike, Nucor's list price for WFBs (ASTM A992, W10 x 10, W18 x 6, W24 x 7) remains at $35.75 cwt. ($788 /mt or $715 /nt) FOB mill. While domestic mills have become increasingly firm against offering discounts, large customers with significantly-sized orders should still be able to negotiate a deal at below listed prices.
On the import side, foreign WFB offers to the US haven't been too competitive against US domestic mills lately; however, they are more prevalent than those of some other longs products. Traders still inform SteelOrbis that most interest in import offers is geared towards January 2010 deliveries, when domestic prices are projected to be higher than they are today.
Nonetheless, after raising prices by about $2.50 cwt. ($55 /mt or $50 /nt) since our last report in mid-June, Mexican mills are currently offering WFB to the US for September and October at around $32.00 cwt. to $33.00 cwt. ($705 /mt to $728 /mt or $640 /nt to $660 /nt) delivered to California and Texas.
European WFBs from ArcelorMittal are also being offered to the US, albeit at longer lead times and less consistently than in previous months. Europe's offers also increased by a couple dollars-per-hundredweight since our last report and can be found for around roughly $32.00 cwt. to $33.00 cwt. FOB US ports.
According to license data from the US DOC, while remaining at very low levels, volumes of H-beams imported by the US registered a modest increase in June from May, rising to 6,480 mt in June from 3,940 mt in May. After an uncharacteristically low tonnage month from Luxembourg (origin of ArcelorMittal Europe's tons) in May, at 224 mt, June H-beam imports from Luxembourg increased to 2,411 mt. However, Korea has exported the most WFB tonnage to the US for the past two consecutive months, with 3,103 mt in June.