US plate mills rescind latest increase; otherwise trying to hold firm

Thursday, 05 November 2009 01:05:36 (GMT+3)   |  
       

After an unsuccessful try, US plate mills are no longer pushing for the $2.00 cwt. ($44/mt or $40/nt) increase they announced in September. However, they are still attempting to hold prices firm for the reminder of the year.

Nevertheless, domestic mills' attempt to keep prices firm may prove futile. Scrap prices are expected to decline by about $25 to $40/long ton this month and flat rolled prices are expected to follow. Furthermore, domestic plate spot transactions are already far below mills' asking prices. As a result, US plate mills may be forced to decrease their offers by about another $1.00 cwt. to $2.00 cwt. ($22/mt to $44/mt or $20/nt to $40/nt) before the year's end.

For now, while most domestic plate mills are offering to customers at around $34.00 cwt. to $35.00 cwt. ($750 /mt to $772 /mt or $680 /nt to $700 /nt) FOB mill (for commercial grades -- A36, base sizes, mill plate), the majority of spot transactions are happening in the general range of $31.00 cwt. to $32.00 cwt. ($683/mt to $705/mt or $620/nt to $640/nt) FOB mill. Larger, long-term clients may be able to negotiate spot offers down even further.

US plate demand remains extremely weak, and a large portion of market transactions are service centers that need to fill some inventory gaps buying from other service centers at significantly reduced rates. However, demand is even worse on the import side.

Most traders' customers haven't expressed any interest in plate imports for several months. The fact remains that there is still an excess of foreign plate products scattered around ports from earlier in the year that anyone looking for quick inventory can pick it up at for mostly in the high $20s cwt. Furthermore, most buyers believe that US mill offers will continue to slide over the next couple months, and that US prices are unlikely to increase until the end of the first quarter at the earliest. As a result, buyers are reluctant to book any import tonnage even at low prices for first quarter delivery, figuring that domestic prices may still be just as low, if not lower, at that time. For example, one trader informed SteelOrbis that they received a Brazilian plate offer with a sales price calculating to approximately $31.00 cwt. to $32.00 cwt. ($661/mt to $705 /mt or $600/nt to $640 /nt) duty-paid, FOB loaded truck in US Gulf ports, which is not competitive enough to be attractive to US buyers. However due to the trend US domestic spot prices, it would be very difficult for any import offer to be attractive right now aside, perhaps, from some niche products.

Preliminary license data from the US Import Administration demonstrates that total import tonnage of cut-to-length plates decreased in October from September at 33,703 mt (preliminary census data) and 32,173 mt respectively. The majority of these exports to the US during October were shipped from Canada, at 22,545 mt. Sweden, Austria and Germany were the only offshore sources to ship over 1,000 mt of plate tonnage to the US; at 2,071 mt, 1,337mt and 1,178 mt respectively.


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