While US wide flange beam (WFB) mills announced a $1.50 cwt. ($33 /mt or $30 /nt) decrease on published prices last week, they also announced an end to "foreign fighter" discounts.
Currently, Nucor's list price for WFBs (ASTM A992, W10 x 10, W18 x 6, W24 x 7) is at $36.25 cwt. ($799 /mt or $725 /nt) ex-mill. However, most domestic spot transactions were being offered at a significant discount, at around $32.50 cwt. to $34.00 cwt. ($717 /mt to $750 /mt or $650 /nt to $680 /nt) ex-mill, just last week, as part of foreign fighter discounts to wage against low-priced imports. But mills have announced that they will no longer provide offers below published prices as of last Friday, October 16.
Now the question is whether domestic mills will in fact be able to hold firm on their statement to not offer discounts. Once just one mill allows a couple orders to slip below the published price, the flood gates could open again.
Furthermore, domestic WFB mills will also try to keep list prices firm throughout the remainder of the year; however, this is less likely, as WFB prices will be mostly dependant on the scrap prices, which are expected to experience another decrease next month. Even if WFB mills manage to somehow avoid a published price decrease, the gap between the spot market and list prices is already far too great for mill prices to have any real credibility.
US WFB demand continues to be lethargic; however, inventory levels have managed to stay relatively neutral recently. According to the latest monthly Metal Service Center Institute (MSCI) shipment and inventory report, daily and monthly shipments of structural products were almost identical from August to September, with daily shipments in both months hovering at around 10,200 nt in both months and monthly shipments totaling 214,000 nt in August and September. Monthly inventory levels also remained stable from August to September at approximately 550,000 nt. The estimated amount of inventory overhang also remained neutral from August to September at 2.6 months. Nevertheless, as one distributor informed SteelOrbis, "More and more activity is coming from local distributors just depleting their warehouse at basically no profit for end-year auditing."
On the import side, there remain some offers out there but it is apparent, with the end of the foreign fighter discounts,that US WFB mills are more concerned with their domestic competition than anything from oversees. While some traders believe there could be a slight uptick in bookings over the next month or so for later first quarter arrivals, the current import market is extremely quiet.
Nevertheless, ArcelorMittal offers, mostly from Luxembourg and Spain, continue to be at some of the lowest prices traders have seen, at approximately $31.00 cwt. to $31.50 ($683 /mt to $694 /mt or $620 /nt) FOB loaded truck US ports; however, US domestic spot offers are already near this range. INI Steel offers from Korea have also stayed on the radar in recent weeks, ranging from about $32.00 cwt. to $33.00 cwt. ($705 /mt to $728 /mt or $640 /nt to $660 /nt) FOB loaded truck US ports.
According to license data from the US DOC, volumes of H-beams imported by the US increased drastically from 3,371 mt in August to 10,406 mt in September. Monthly tonnage from Luxembourg increased from 1,573 mt in August to 4,469 mt in September, imports from Spain increased from 170 mt to 1,9123 mt respectively, and tonnage arriving from Korea increased from only 52 mt in August to 2,817 in September.