US domestic plate market exudes short-term optimism and long-term skepticism

Wednesday, 23 February 2011 03:12:07 (GMT+3)   |  
       

February continues to show steady activity as spot market prices are continuing to rise.

The announced increases of $5.00 cwt. ($110/mt or $100/nt) in the week of February 11th from several mills have slowly been absorbed into the US domestic plate market, as spot prices are now approximately $50.00-$53.00 cwt. ($1,102-$1,168/mt or $1,000-$1,060/nt) ex-Midwest mill, a $1.00 cwt. ($22/mt or $20/nt) increase on the low end, but a $2.00 cwt. ($44/mt or $40/nt) increase on the high end over previously reported ranges two weeks ago. Whether the full $5.00 cwt. announced increase will actually take effect remains uncertain, and there is widespread belief that it may take another increase in March to fully push through the early February announcements.

Demand on the service center side has picked up so far in 2011, and the latest data from the Metal Service Center Institute (MSCI) confirms what many have reported to SteelOrbis over the previous weeks-that January was a strong month, and according to these same sources, February activity is already faring better than most months in 2010. Daily shipments of plate from US service centers in January were up approximately 23 percent from daily shipments in December, and also reached the highest level since 2008. Month-on-hand inventories fell last month to 2.4 months last month from 2.9 months in December 2010.

Lead times are now moving into April from most domestic mills but the availability of product remains tight; and so, supply levels appear to be the foremost reason for higher spot prices in today's market. Nonetheless, with the tighter market, sources indicate that buying activity for April/May delivery is a "safe bet," and no significant drop-off is expected until after Q2.

Still, anything beyond that is a risk few a willing to take. Purchasing activity at offshore mills remains light with current offers now slated for early summer delivery. Both Russian and Malaysian offers of cut-to-length plate are at approximately $46.00-$48.00 cwt. ($1,014-$1,058/mt or $920-$960/nt) duty-paid FOB loaded truck in US Gulf ports, but steel plate futures purchasing activity is almost non-existent.


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