Despite the recent rise in US shredded scrap prices, buyers say domestic wide flange beam (WFB) prices are most likely to remain flat in the first month of the New Year.
Many buyers have expressed some optimism about 2009; however, no improvement in the WFB market has been observed during the fourth quarter. Although US scrap prices are heading back up, demand for beam products is currently minimal. With the holiday season just around the corner, along with the slumping construction markets, many buyers are crying slow sales and high inventories. A price increase at the mill level would be difficult to justify this early on, but the large increase in shredded scrap prices cannot be ignored either. It is rumored that Nucor is checking into the possibility of increasing pricing slightly in order to give the markets the confidence that things are turning around. Any increase announced will be a symbolic one and considering the current market conditions, WFB transaction prices are more likely to remain stable for January shipments.
Nucor-Yamato’s rolling schedule reveals some clues as to how busy the beam producers are. Most sections are now produced every four weeks, while they used to be produced every eight weeks during the course of the summer. Sizes bound to be rolled in a few weeks are still said to be open for order acceptance and the “controlled order entry” conditions are now all but lifted completely.
Still, a market turn-around could take place in the first quarter of next year, as President-elect Obama has announced his national infrastructure rebuilding plan, which will create a huge demand for construction materials, including, but not limited to, wide flange beams.
In October and November, for the first time in recent years, domestic WFB prices fell two consecutive times. The most recent price decrease was announced a little over a month ago, as North American beam leader Nucor-Yamato dropped its transaction price another $83 /nt ($4.15 cwt. or $91 /mt) after the company’s raw materials surcharge (RMS) fell to a level of $0.00 cwt.
The November decrease brought domestic standard-sized beam (ASTM A992, W10 x 10, W18 x 6, W24 x 7) prices to a new level of $43.45 cwt. ($958 /mt or $869 /nt) FOB mill. Mill sales people tell their customers that they will be competitive, especially with foreign offers, and some discounts are offered on a selective basis. Overall, the pricing trend is neutral as prices are expected to remain at this level for another month.
On the import side, business continues to be slow as US demand has weakened from a few months ago. The import market is very silent, although the anticipated increase in US demand next year is expected to boost offshore sales, especially if import offers come in at below domestic levels. The only active source from Asia remains Korea, with controlled shipments so far. All other sources remain quiet for the time being.
According to data from the US Import Administration, worldwide import tonnage of H-beams to the US totaled 11,131 mt, 6,477 mt, and 7,564 mt in September, October and November 2008, respectively. In comparison, data from 2007 showed September with 17,957 mt, October with 19,214 mt and November with 12,577 mt. These figures indicate a significant decrease in volumes from 2007, and imports are not posing much of a threat for the domestic beam producers.