Domestic US plate market prices have been on the decline for two consecutive months, as the global financial crisis, plummeting energy prices and shrinking shipbuilding backlogs continue to negatively impact plate demand.
After remaining relatively strong throughout most of the second half of 2008 while most other steel product industries were plummeting, the US plate market eventually started to feel the effects of the increasing number of postponed infrastructure and energy projects. Even though mills continue to cut production levels in order to help control inventory levels, the current lack of big projects and the difficulty of getting financing for big projects have led to even lower demand, forcing plate prices down further.
Domestic standard plate prices have declined by about $10.00 cwt ($220 /mt or $200 /nt) since late December and are now in the range of approximately $40.00 cwt. to $42.00 cwt. ($882 /mt to $926 /mt or $800 /nt to $840 /nt) FOB mill for commercial grades (A36, base sizes, mill plate). SteelOrbis has learned that some deals may be negotiated at prices below this range for certain sizes and significant tonnage. This large price decrease has helped narrow the gap between plate and hot rolled coil (HRC) prices, the most competitive of which are hovering at around $25.00 cwt. ($551 /mt or $500 /nt).
The current gap between plate and HRC prices of $15.00 cwt. ($331 /mt or $300 /nt) is still on the high side and could continue to narrow. HRC prices have stabilized for the most part, but as for plate prices, it is too early to conclude that the bottom is near.
However, a factor which may positively impact the plate market is President-elect Obama's proposed economic stimulus package, which includes billions in infrastructure spending. While most plate mills and distributors are eager to see the extent of the results generated by the stimulus package, there are mixed opinions as to how soon the market will see any measurable results. One seller told SteelOrbis that anyone expecting the stimulus package to create an immediate impact in the plate industry is a "wishful thinker."
Demand for imported plate remains even weaker than domestic plate demand, mostly due to the uncertainty of the direction that the plate market will take over the next couple of months. Some import offers are being booked here and there at prices in the mid-$30s cwt.; however, most buyers believe there is just too much risk involved with offshore purchases, considering lead times and the downward potential of domestic prices.
License data from the US Import Administration indicate that worldwide import tonnage to the US declined drastically from the first two months of the fourth quarter compared to December. October and November imports totaled 134,927 mt and 143,366 mt respectively, while December imports totaled only 44,785 mt.
As for cut-to-length plates, the license data show that fourth quarter worldwide import tonnage to the US decreased in December, after registering an increase in November. October import tonnage totaled 87,568 mt, while November imports increased to 118,283 mt, only to drop again to 75,037 mt in December.