US plate mills continue attempting to keep offer prices firm, but market prices are still trending downward.
While US producers of some steel products have unofficially rescinded their most recent price increases in recent weeks, domestic plate mills continue to push for the $2.00 cwt. ($44 /mt or $40 /nt) price increase announced last month in an attempt to keep offers, in the Midwest, in the general range of $36.00 cwt. to $37.00 cwt. ($794 /mt to $816 /mt or $720 /nt to $720 /nt) FOB mill (for commercial grades -- A36, base sizes, mill plate). Nevertheless, demand remains lethargic, and despite mills' best efforts to keep offers firm, final transaction prices continue to be significantly less than the above range, ranging from about $32.00 cwt. to $33.00 cwt. ($705 /mt to $728 /mt or $640 /nt to $660 /nt), with the potential for larger clients to negotiate additional discounts.
More specifically, the Houston area continues to see plate offers being discounted even further, mostly due to excess import tonnage still sitting at service center warehouses and ports. Many distributors can find plate offers from domestic mills for around $29.00 cwt. to $30.00 cwt. ($639 /mt to $661 /mt or $580 /nt to $600 /nt) ex-mill, or even lower, depending on client and tonnage. Regardless, the majority of plate transactions throughout the US are actually occurring from local distributors selling off their excess inventory, sometimes at a loss, for end-of-the-year tax purposes.
Despite the weak demand and high amount of supply in the market, US service centers managed to further draw down their plate inventory levels last month. According to the most recent Metal Service Center Institute (MSCI) monthly shipment and inventory report, daily and monthly shipments of plate tonnage slightly increased from August to September, from 11,400 nt to 11,500, nt respectively for daily shipments, and from 240,000 nt to 242,000 nt for monthly shipments. Meanwhile, monthly plate inventory declined to its lowest level in years, from 726,000 nt in August to 713,000 nt in September, and average monthly inventory overhang declined from an estimated 3.0 months in August to 2.9 months in September.
On the import side, most buyers believe that despite US mills trying to keep prices firm, offers will continue to slide, especially over the next couple months, and possibly into the first quarter. As a result, buyers are reluctant to book any import tonnage even at low prices for first quarter delivery, figuring that domestic prices may be just as low at that time. Furthermore, traders continue to inform SteelOrbis that there still remains an abundance of excess imported inventory on the ground at Gulf ports, mostly from deals gone awry earlier in the year. This excess tonnage has allowed buyers to pick up quick orders on the cheap, and even though some of the tonnage has been sitting there for most of the year, it could still be a while before it is depleted.