Eight weeks into 2009, the domestic US plate market is still dominated by weak demand, leading to slow sales activity; however, double-digit monthly price declines appear to be a thing of the past, thanks in part to slightly improving inventory levels.
Domestic standard plate prices have trended neutral-to-slightly down since last month, and while the current range is still 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), most offers will be seen at the lower end of this range, and orders for certain sizes including significant tonnage may be negotiated even lower. However, the current price range may provide a small sigh of relief for many traders, even though business remains extremely slow, considering that standard plate prices had free-fallen by over $10.00 cwt. ($220 /mt or $200 /nt) in each of the two previous months leading up to February.
Furthermore, inventory levels appear to be improving. According to the most recent Metal Service Center Institute (MSCI) shipment and inventory report, the amount of daily plate shipments were at an estimated 14,200 nt in January, compared to 13,400 nt daily shipments in December 2008. This represents the first month-over-month increase in daily shipments of plate products since May 2008. Also, while the amount of time inventory stays in the warehouse before being sold was an estimated 4.0 months in January, it was an estimated 4.2 months in December, indicating the first month-over-month decrease in inventory levels since October 2008.
Nonetheless, one month of increased daily shipments is hardly a trend. The fact remains that most service centers and traders continue to have a difficult time moving product. And when they do move product, they often have to sell it at a loss, sometimes at less than what they paid for it at mill level. For many, the goal right now is to just survive this prolonged downtrend and to have the pieces ready to thrive once conditions improve.
On the import side, demand remains even weaker than for domestic plate. Most buyers just see too much risk and uncertainty in the market to consider buying imports right now. Regardless of the price difference between domestic and import offers, which is currently around $6.00 cwt. to $8.00 cwt. ($132 /mt to $176 /mt or $120 /nt to $160 /nt), with import offers now at about $32.00 cwt. to $32.50 cwt. ($705 /mt to $717 /mt or $640 /nt to $650 /nt), with the longer lead times for imports, domestic prices may have fallen further by the time the imported product is received.
License data from the US Import Administration indicate that import tonnage of cut-to-length plates increased from December 2008 to January 2009, at 71,250 mt and 92,099 mt respectively. The estimated January 2009 import level is also slightly higher than January 2008 imports, which totaled 87,199 mt. Canada and Ukraine were the top two largest importers of cut-to-length plates to the US for the second consecutive month in January 2009, at 15,747 mt and 14,606 mt respectively.