While US wide flange beam (WFB) prices will not rise for September shipments, domestic mills may be tempted to increase prices again for October, especially if scrap costs register another up-tick. However, some distributors believe that a wide gap between spot offers and list prices and the emergence of low-priced import offers may cause domestic mills to think twice before their next price announcement.
For now, as per Nucor's latest announcement that it will keep WFB transaction prices stable in September from August (offsetting the $3/nt increase in benchmark shredded scrap prices with a matching decrease in base prices), Nucor's list price for WFBs (ASTM A992, W10 x 10, W18 x 6, W24 x 7) remains at $37.75 cwt. ($832 /mt or $755 /nt) FOB mill. But some domestic mills may be more willing to negotiate and offer significant discounts on sizable orders because demand remains below profitable levels and they want to prevent any possible import business from booking.
Most spot offers are still a few dollars-per-hundredweight below listed rates.
Nevertheless, other distributors believe that domestic mills should be able to increase WFB prices if scrap increases over the next month because domestic WFB activity has begun to slowly pick up. According to the latest Metal Service Center Institute (MSCI) shipment and inventory report, monthly shipments both increased slightly from May to June, from 10,800 nt to 10,900, and from 216,000 nt to 239,000 nt respectively. Furthermore, inventories continued to decrease from 553,000 nt in May to 529,000 nt in June and the average monthly inventory overhang decreased from an estimated 2.6 months in May to only 2.2 months in June.
Meanwhile, import WFB offers have been gaining a little momentum recently. ArcelorMittal increased their offers from Europe by about $2.00 cwt. ($44 /mt or $40 /nt) over the past month; however, most offers are still well below the US domestic range, at approximately $31.00 cwt. to $32.00 cwt. ($683 /mt to $705 /mt or $620 /nt to $640 /nt) FOB US ports. Korean offers are hovering around the same range.
Mexican mills are offering WFB to the US at about $1.00 cwt. ($22 /mt or $20 /nt) higher than their foreign counterparts, but Mexico's proximity to US borders make the approximate range, of $32.00 cwt. to $33.00 cwt. ($705 /mt to $728 /mt or $640 /nt to $660 /nt) delivered to California and Texas, attractive for some potential buyers.
Nonetheless, despite low-priced import offers and an increase in offer visibility, bookings haven't increased recently. Lead times and overall market uncertainty could continue to keep import transactions off the books over at least the next month or two, with no substantial increase in volumes seen until at least early next year.
According to license data from the US DOC, volumes of H-beams imported by the US remained at low levels in June and July, decreasing approximately 31 percent from 6,480 mt in June to 4,458 mt in July. Tonnage from Luxembourg (origin of ArcelorMittal Europe's tons) decreased from 2,411 mt in June to 1,440 nt in July and Korean tonnage decreased from 3,103 nt in June to only 303 nt in July. However, imported H-beam tonnage from Germany increased drastically from June at 40 mt to July at 1,395 mt.