Nucor-Yamato has announced wide flange beam (WFB) prices for May shipments at significantly higher numbers than those for April, and it is looking like prices are going to continue their upward climb in June as well.
US scrap prices soared in the beginning of April with prices for shredded scrap jumping up almost $150 /long ton. Domestic WFB mills passed on a large portion of that increase to customers, although many industry execs were surprised that the whole scrap increase didn't get passed along to customers. Rebar and merchant bar products saw the whole scrap surcharge being passed along, but WFB saw only $110 /nt of the surcharge being pushed on to the transaction price.
The domestic mills' logic has confused many market insiders since it is well known in the market that WFB are stronger than rebar or merchant bar products. The move may be attributed to Nucor trying to protect their core customer base, fabricators, and to soften the price increases some. Fabricators who have already committed to jobs at a fixed value would have had a hard time digesting the full scrap increase in their margins. But since Nucor didn't increase their prices to the full extent last time, there is more room for prices to go up come June, perhaps over and beyond the next scrap increases.
Scrap dealers have told SteelOrbis that, in May, shredded scrap prices are expected to increase by approximately $30 /long ton, a mild increase when compared to the previous month. With another scrap increase on its way, most buyers feel that Nucor, the North American long products leader, will boost its prices to keep up with rising raw materials costs.
Including the $110 /nt ($5.50 cwt. or $121 /mt) increase for WFB products, May prices for standard-sized WFB (ASTM A992, W10 x 10, W18 x 6, W24 x 7) are at $50.35 cwt. ($1,110 /mt or $1,007 /nt) FOB mill for May shipments.
Nucor-Yamato's rolling schedule shows a tight order book with the summer months working on controlled order entry. However, buyers are saying that although WFB are one of the strongest steel products in the market, lead times at mills are not pushed out too far, and there doesn't seem to be any shortage.
At the same time though, imports are scarce. Offers are out there, but they are significantly higher-priced than the domestic offers, even with the newly announced $110 /nt increase, and so no one is buying. This is another reason many buyers believe that domestic mills will go up with their prices in June once again. Domestic mills' import competition is minimal, and even if domestic mills pass on a large increase, their prices would still be much lower than international levels.
All of the import offerings that SteelOrbis has heard are too high to be accepted in the US market. Taiwan's new price idea is at least 15 percent above the US number, and a few Russian offers were floated with size restrictions at 20 percent above the domestic prices. Needless to say, no orders are close to being fixed. US service centers are not taking these offers from offshore mills and are relying strictly on domestic material to build their inventories.
Since the beginning of 2008, WFB imports in the US have been diminishing and at the current offshore pricing levels the trend is expected to continue. Census and license data from the US Import Administration show worldwide export tonnage of H-beams to the US decreased significantly from January and February to March and April. In January, the US saw 51,128 mt of H-beams arriving from offshore sources, and saw 43, 561 mt in February. In March and April 2008, however, import WFB tonnage tonnage totaled only 13,690 mt and 14,671 mt, respectively.