While US mills' recently announced $40 /nt ($2.00 cwt. or $44 /mt) price increase on July orders may stick, demand remains depressed and inventories remain high, leaving many buyers and distributors to question whether prices will see any significant recovery over the next couple months.
With last week's pricing increase, US mills are hoping to push plate transaction prices to a range of approximately $30.00 cwt. to $31.00 ($661 /mt to $683 /mt or $600 /nt to $620 /nt) FOB mill in the Midwest and Gulf for commercial grades (A36, base sizes, mill plate). However, spot prices are about $40 /nt ($44 /mt or $2.00 cwt.) under listed prices, and larger customers with significant orders may still be able to negotiate further.
The primary reason Nucor was able to announce a plate price increase last week is the recent rise in raw materials costs. But while the company expressed to customers that the price hike also resulted from increasing order entry and demand, many domestic customers still haven't seen a demand improvement. Average lead times for domestic plate inquiries are at about mid-July, compared to lead times of at least six weeks for most other flat rolled products. One distributor told SteelOrbis, "Activity has increased a little bit this week but that's only because customers want to see if they can still buy at the previous levels. However, customers seem to now have a more positive outlook than a negative one."
On the inventory side, the de-stocking has continued. According to the most recent Metal Service Center Institute (MSCI) monthly shipment and inventory report, while daily shipments of plate increased from 10,500 nt in April to 11,100 nt in May, inventory levels decreased drastically from 996,200 nt in April to 794,800 nt in May. This resulted in inventory overhang decreasing from about 4.3 months in April to 3.6 months in May, which is still extraordinarily high especially considering the low amount of tons.
Meanwhile, import plate offers to the US continue to become increasingly quiet. Many traders are no longer hoping to book any sizable import plate orders. Regardless of price, there is too much volatility in the market outlook and vessels are too difficult to book to justify importing plate to the US. Furthermore, if serious buyers are interested in imported plate, there is still an abundance of plate tonnage, in a variety of sizes, on the ground at multiple US ports that buyers could quickly pick up at a discounted rate.
Preliminary census data from the US Import Administration demonstrates that import tonnage of cut-to-length plates increased slightly from April, at 23,726 mt to May, at 24,795. May 2008 import tonnage to the US was at 67,699 mt. The top three importers of plate tonnage to the US in May were Canada, Malaysia and Austria, with 8,831 mt, 4,874 mt and 4,643 mt respectively. This was the most plate tonnage Malaysia had imported to the US in over the past year.