Although prices for wide flange beams (WFB) decreased this month, the announcement has not significantly affected the weak demand-plagued market.
After Midwest shredded scrap prices dropped by $40/lt earlier this month, long product mills followed in lock-step by reducing transaction prices for WFB, merchant bar, structurals and rebar all by $1.00/cwt. ($22/mt or $20/nt). Because the reduction only amounted to half of the raw materials surcharge (RMS), many in the industry predicted that mills were leaving room for either another announced decrease before the month was up, or flexibility to make deals on a case-by-case basis.
However, the price decrease has done little to impact the domestic WFB market; the only difference between last month and this month is that mills are offering a little less for their product. Buying activity is still so tepid, and typical orders are so small, that service centers are not motivated to push for drastic deals. The reluctance to purchase beyond immediate needs is evidenced in the latest MSCI Metals Activity Report, which states that monthly shipments rose from 201,200 nt in May to 211,600 nt in June, while month-ending inventories dropped from 531,900 nt in May to 527,800 nt in June. Therefore, transaction pricing is mostly firm, bolstered by little to no import pressure and domestic mills running at limited capacity. Current prices for WFB are listed at $36.25 cwt. ($799/mt or $725/nt) ex-mill for ASTM A992, W10 x 10, W18 x 6, and W24 x 7.
Demand for WFB is still terribly sluggish, and new construction industry statistics suggest that a significant uptick in activity might not be seen in the second half of the year. It should be noted, however, that at least the sector isn't doing worse. For example, even though overall construction spending fell 3 percent in June, nonresidential spending-including healthcare, amusement and educational facilities-grew 9 percent month-on-month. Additionally, the Associated General Contractors of America recently reported that "construction employment edged closer to stabilizing in June, as half the states either added construction jobs or kept the same number in May." However, Ken Simonson, the association's chief economist, tempered the positive news with a dose of historical perspective. "There's little room to celebrate with overall construction employment at a 14-year low and demand for most construction services still weak," he said. As for the promise of more infrastructural projects, Simonson noted that "the overall lack of demand for new construction is hurting more than the stimulus is helping at this point."
As previously mentioned, domestic mills are not facing much pressure from WFB imports at the moment. Import prices have not fluctuated since last month, still hovering at about 10 percent less than US prices. However, beam buyers have no motivation to order overseas when they are barely patronizing domestic mills. The quiet import situation has been evident for months; according to the latest import data from the US Import Monitoring and Analysis System (SIMA), the US imported 14,313 mt of WFB in June, compared to 21,534 mt in May. July's preliminary numbers don't look much better, with 13,160 mt reported as of July 27 and only a few days left in the month. The US' top import source for beams in June was Korea, with 9,816 mt, but so far in July, only 2,955 mt has been imported. Likewise, Luxembourg brought in 2,053 in June, but only 1,475 so far in July. South Africa, which exported a startling 3,099 mt in May, only brought in 1,212 mt in June and 657 mt in July.