The US plate market is showing more signs that it is being affected by the global financial crisis, as overall demand has drastically slowed, thus causing prices to plummet since last month.
The US plate market had remained relatively strong up until couple of months ago, as demand, especially on the end-user side, remained high and any price decreases were minimal in comparison with those seen for other steel products. However, over the last two months, US plate demand has significantly decreased due to the economic slowdown affecting demand, most notably, from the energy and infrastructure industries. And despite mills’ best efforts to keep inventory levels low by cutting production, they were not able to prevent a significant price decrease.
The latest service center data indicates the prevailing weak demand. According to the Metal Service Center Institute (MSCI) shipment and inventory report, US plate shipments totaled approximately 344,000 net tons in November, compared to 434,000 nt in October.
Moreover, total US mill plate inventories were at about 1.25 million nt in November, compared to nearly 1.3 million nt in October. However, due to the deteriorating demand for plates, November inventories were equal to about 3.6 month's worth of inventory stock, compared to only about 3.0 month's worth of inventory stock in October. When orders stopped coming, mills were forced to lower prices, hoping to fill their order backlogs. Through some announced and unannounced price decreases, domestic standard plate prices declined by about $14.00 cwt. ($309 /mt or $280 /nt) since the beginning of November and are now in the range of $50.00 cwt. to $52.00 cwt. ($1,102 /mt to $1,146 /mt or $1,000 /nt to $1,040 /nt) FOB mill for commercial grades (A36, base sizes, mill plate). Despite the big drop, plate prices are still much higher than HRC prices, which are floating at around $25.00 cwt. ($551 /mt or $500 /nt).
Heading into the New Year, the US domestic plate market will probably continue to see little demand for the first two months, as a direct result of the stagnant economy and slow holiday season; however, many market players are hopeful that activity may begin to pick up towards the end of the first quarter on the scheduled new infrastructure and energy development projects. But for now, the pricing trend for plates remains down.
The demand for import plate is also weak but since the pricing gap between domestic and imports has widened, there has been some interest in booking imports. While most import offers fall in the mid-$40’s cwt., SteelOrbis has also heard plate offers as low as the mid-$30’s. But overall, most buyers believe that booking imports is just too risky right now, mostly because of the economic uncertainty and long lead times.
License data from the US Import Administration show that during the month of November 2008, for plates in coils, worldwide export tonnage to the US totaled 148,192 mt with the top three exporters being: Turkey, at 77,284 mt; Canada, at 37,691 mt; and Netherlands, at 10,919 mt.
As for cut-to-length plates, the license data show worldwide export tonnage to the US totaling 125,185 mt in November, with the top three exporters being: Ukraine, at 37,888 mt; Thailand, at 16,909 mt; and Russia, at 16,486 mt.