Domestic service centers reacted mildly to this month's sideways price move for wide flange beams (WFB), as purchasing activity remains tepid in the market's "new normal".
Earlier this month, WFB mills decreased their raw materials surcharge by $30/long ton in reaction to lower scrap costs, and raised base prices by the same amount, leveling off transaction prices. While some in the industry were surprised that mills would keep prices high on a product that has seen anemic purchasing activity for months, there has not been wide-ranging disapproval with the move--mills have little trouble getting their asking prices, which are still approximately $38.50 cwt. ($849/mt or $770/nt) ex-mill (for ASTM A992, W10 x 10, W18 x 6, and W24 x 7). However, some service centers are selling beams to their customers at or slightly above mill prices, indicating that there might be deals available based on tonnage level or customer relationship.
The leveling-out of WFB prices has followed a relatively static trend along with shipments and inventory levels at service centers in September. According to the latest MSCI Metals Activity Report, monthly shipments of beams ticked up a negligible amount, from 228,700 nt in August to 228,900 nt in September. However, when viewed in the context of long-term trends, September's monthly shipments reflect the highest level since July of 2009 (aside from a brief spike in March of this year). As for month-ending inventories, levels actually decreased from August to September, but only slightly (533,600 nt and 529,200 nt, respectively).
MSCI data for October will likely resemble September data, as demand is still steady, but lackluster. Many in the industry believe that real improvement in demand will not arrive until next year, however a boost in confidence might follow the upcoming election, depending on the results. For now, most purchasing activity is still heavily skewed toward domestic products, although there have been reports of significant import tonnage coming in during January 2011. Import offers from Spain have not garnered much activity lately, while offers from Korea, at approximately $34.00 cwt. ($750/mt or $680/nt) duty-paid FOB load truck in West Coast ports, have received some attention--lead times are not as much of a gamble when domestic prices are steady.
As mentioned above, import WFB offers over the summer were slightly lower than current prices, yet import statistics show significant improvement in import shipments in October (when mid-summer purchases arrived). According to import license data from the US Import Monitoring and Analysis System (SIMA), the US has already imported 17,237 mt of WFB in October, a substantial jump from the 7,103 mt imported in September. While Korea only exported 462 mt of beams to the US in September, it once again topped the source list in October with preliminary levels of 6,166 mt. Spain also significantly increased beam shipments to the US, with 5,205 mt so far in October, compared to 1,508 the month before. Other notable sources of beams in September and October were Luxembourg, with 3,328 mt and 2,616 mt respectively; Germany, with 1,219 mt and 1,989 mt respectively; and Taiwan, with 1,123 mt so far in October, compared to virtually nothing (0.3 mt) in September.