As was predicted by SteelOrbis earlier this month, all major US beam producers have kept prices flat for the month of May, despite the softening shredded scrap market.
Unlike merchant bar and rebar producers that were forced to decrease transaction prices, major beam producers were able to keep prices stable because of the steady demand the beam market has been experiencing. The non-residential construction market has been doing amazingly well, as schools, shopping centers, parks, etc. are continually being built for all of the housing developments that were constructed the previous year. However, market analysts are concerned about how long this building activity will last. With the housing market currently in a slump, the commercial construction boom will have to come to an end eventually. But for now, thanks to the non-residential construction market, beams are the strongest long product in North America.
To recap, shredded scrap prices fell $45 /long ton in April, but producers counterbalanced the drop in Raw Materials Surcharge (RMS) by raising their base prices. As a result net prices remained the same for May deliveries. For the remainder of April and throughout the month of May, published prices from both Chaparral Steel and Nucor-Yamato for standard sized wide flange beams (ASTM A992, W10 x 10, W18 x 6, W24 x 7) range from $38.25 cwt. to $38.50 cwt. ($843 /mt to $849 /mt or $765 /nt to $770 /nt) FOB mill.
Prices for June will be determined after May's scrap prices are announced. Market sources say that shredded scrap may fall as much as $30 to $40 /long ton in May. If that is the case, it is believed WFB prices will follow the trend and go down as well. The beam market is strong, but not strong enough to withstand another significant drop in scrap prices. If scrap prices do fall the expected $30-$40 /long ton, beam prices will possibly decrease by only a fraction of the decrease in RMS, perhaps by $10 to $15 /nt. If the scrap market rebounds somewhat in the next week and prices only slip slightly, WFB prices may be able to hold firm again for June.
On the import side, there is very little being offered to the US right now as other world markets like the Middle East are willing to pay premium prices for the same product. Import tonnage arriving on the West Coast, however, is heavier than the Gulf Coast region, as there are more construction projects on the West Coast and it is farther from most domestic mills.
Offering prices from Chinese mills have remained the same since our last report three weeks ago, though the pricing trend is up. Now that the VAT rebate being reduced to zero is no longer speculation, Chinese mills will most likely be upping their offering prices to make up for what they would have received from the rebate. There are more Chinese beam mills coming on stream, however, not many of them are capable of producing inch sizes that the North American market requires.
Chinese offers are in the range of $37.00 cwt. to $38.00 cwt. ($816 /mt to $838 /mt or $740 /nt to $760 /nt) FOB ex-dock Gulf and West Coast.
Taiwanese offers are already headed up, increasing by $2.00 cwt. since our last report. Offers are higher than Chinese offers, now ranging from $42.00 cwt. to $43.00 cwt. ($923 /mt to $948 /mt or $840 /nt to $860 /nt) FOB ex-dock Gulf and West Coast.