Domestic US plate producers announced a price increase this week for the first time this year however, recent service center shipment data suggest that plate demand continues to be extremely sluggish.
US plate mills this week announced that they would increase prices by $1.00 cwt. ($22 /mt or $20 /nt) on shipments beginning this week, resulting in a new plate transaction price range of about $28.00 cwt. to $29.00 cwt. ($617 /mt to $639 /mt or $560 /nt to $580 /nt) FOB mill in the Midwest and Gulf for commercial grades (A36, base sizes, mill plate). The price increase comes on the heels of the $20 /nt ($1.00 cwt. or $22 /mt) raw materials surcharge (RMS) increase on plate products established a couple weeks ago. The price increase does not necessarily point to strength in the market, however. While mills are expected to try and keep prices firm, customers will likely still be able to negotiate better prices for spot deals of significant tonnage as mills' order books are still not particularly strong.
While many distributors believe that plate prices will be sustained throughout June heading into July, primarily due to the lack of import competition, many others believe that the ongoing weak demand, coupled with scrap prices being on the decline again in June, could cause spot prices to start weakening again. The latest modest price increase may or may not stop the relentless decline of plate prices in the US, but until demand picks up significantly, it will be difficult for domestic mills to justify any new price hikes in the near future, due to an excess of plate inventory.
Furthermore, most distributors admit that a recent increase in inquiries has not yet resulted in more transactions. In fact, according to the most recent Metal Service Center Institute (MSCI) monthly shipment and inventory report, total US service center monthly shipments of plate products declined from about 295,000 nt in March to 231,000 nt in April, while daily shipments declined from 13,400 nt in March to only 10,500 nt in April. Moreover, the estimated amount of inventory overhang, according to current shipping rates, increased significantly from 3.7 months in March to 4.3 months in April. Overall, inventory de-stocking continues, though it is not happening at a very fast pace.
On the import side, most traders have realized that importing plate is just not worthwhile right now. There is too much uncertainty in the market outlook for the next three-plus months for a buyer to consider purchasing product from overseas, regardless of the price. 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. Still, some traders are fishing the market with offers as low as $21.00 cwt. to $22.00 cwt. ($463 /mt to $485 /mt or $420 /nt to $440 /nt) delivered to US Gulf ports for large-size orders, but, so far, there are no takers.
License data from the US Import Administration demonstrates that import tonnage of cut-to-length plates has continued to decrease, month-by-month, since the start of the year. Plate imports totaled 102,194 mt in January, 65,313 mt in February, 33,825 mt in March, and 23,423 mt in April. Canada, Sweden, Germany and Japan were the top four plate tonnage exporters to the US in April, with 7,671 mt, 4,886 mt, 2,750 mt and 2,060 mt respectively. Preliminary data for May 2009 indicates another dismal month for imports with 24,921 mt in total.