US beam market – Domestic price hike expected for April deliveries

With scrap prices still steadily rising and transaction prices for domestic rebar, bar, and structurals also seeing a significant increase this week, there is no doubt that prices for domestic wide flange beams (WFB) will go up as well. Shredded scrap prices have jumped up $70 /long ton this month, and market players suspect prices will continue to increase over the next month or two but to a lesser degree. As worldwide demand for scrap continues to be strong, US scrap prices have room to move upwards, creating higher raw material costs for steel makers. This most recent scrap increase of $70 /long ton pushed Nucor's Bar Mill Group to up transaction prices for rebar, bars, and structurals by $55 /nt ($2.75 cwt. or $61 /mt). Considering overall demand for WFB is significantly stronger than demand for rebar, bars, and structurals, it is expected that WFB transaction prices for April will increase by at least $55 /nt ($2.75 cwt. or $61 /mt) if not more. Nucor-Yamato has informed SteelOrbis that a price announcement will be made early next week. Adjusting its March WFB prices, Chaparral Steel first announced its price increase, upping transaction prices by $2.00 cwt. ($44 /mt or $40 /nt) but only on certain sizes. WFB sizes that were also offered from China and Taiwan (W10 x 10 88 and W18 x 6 35, 40, 46 and a few others) at the time of the announcement were not subject to an overall price increase in order to compete with imports. Nucor-Yamato followed with its WFB price announcement ten days later, upping WFB transaction prices for all sizes by $1.25 cwt. ($28 /mt or $25 /nt). Chaparral then released a revised version of its price announcement two days following Nucor's, adjusting its transaction price increase down to $1.25 cwt. ($28 /mt or $25 /nt). As it currently stands, Chaparral Steel is continuing to monitor the import market and is not applying any price increase on WFB sizes that are also offered from China and Taiwan. At this time however, common sizes that SteelOrbis regularly reports on (W10 x 10 88, W18 x 6 35, 40, 46, and W24 x 7 55-62) are costing buyers the same price from both Nucor-Yamato and Chaparral Steel. Two sizes, for example, that Chaparral Steel has not increased due to import competition are 12 x 4 x 14, 16, 19, 22 and 8 x 5 ¼ x 18, 21. Prices for those sizes are $34.75 cwt. ($766 /mt or $695 /nt) from Chaparral and $36.00 cwt. ($794 /mt or $720 /nt) from Nucor-Yamato for the remainder of March. In general, domestic prices for standard sized wide flange beams (ASTM A992, W10 x 10, W18 x 6, W24 x 7) range from $35.75 cwt. to $36.00 cwt. ($733 /mt to $739 /mt or $665 /nt to $670 /nt) FOB mill, but are expected to increase for April shipments. All prices are effective at the time of shipment, so most buyers are entering orders for June deliveries and do not know the prices they will be paying then. As for the general market conditions, beams are still the strongest steel product, with demand steady and mills very busy. Lead times are extending all the way until June, and buyers are experiencing controlled order entry from mills for larger sections. The demand for beams is so strong that Nucor-Yamato has decided to shift production of its lighter sizes to the Nucor-Berkley mill to increase productivity on larger sizes. A contributing factor to the increase in demand is the non-residential and industrial construction markets. Both have remained decently strong throughout the winter months and are only expected to grow stronger. The domestic producers are not facing much import competition, as tonnage coming into the US is pretty low. Chinese mills have been shipping to the West and Gulf coasts, with offers up approximately $1.50 cwt. more than SteelOrbis last reported. Not only are Chinese mills increasing prices, they are also putting unusual restrictions on traders, asking them to accept half of the possible VAT rebate decrease if it were to go through during the transaction. Chinese offers are now in the range of $34.50 cwt. to $35.50 cwt. ($761 /mt to $783 /mt or $690 /nt to $710 /nt) FOB ex-dock Gulf and West Coast. Current offers from Taiwan are slightly higher. Korea is also shipping some beams to the West Coast, but mostly to select accounts and only small quantities. Asian mills are experiencing similar demand from the Middle East market to that from the US but at higher prices than US levels, and so the quantities they are making available for the North American market are very limited. Increasing raw materials and demand indicate an upward trend for imported beams, and prices should rise steadily for the next few months.