While US wide flange beam (WFB) mills would like to take advantage of the scrap price uptick by raising published prices in the last month of the year, the continued lack of demand and gap between list and spot prices will most likely force mills to forego an increase.
Since mid-October, Nucor's list price for WFBs (ASTM A992, W10 x 10, W18 x 6, W24 x 7) has remained at $36.25 cwt. ($799/mt or $725/nt) ex-mill. WFB mills had hoped spot prices would inch closer to published prices within the last couple months, but, in reality, the gap between published and actual spot transaction prices has widened further. Mills informed customers last month that they would no longer offer foreign fighter discounts; however, domestic spot transactions have declined about $1.00 cwt. ($22/mt or $20/nt) since last month and can currently be found for around $31.25 cwt. to $32.25 cwt. ($689/mt or $625/nt) ex-mill. Import activity has been even weaker than on the domestic side, reflecting that US mills have been forced to reduce prices just to compete amongst domestic suppliers.
The question remains: will mills be able to avoid further decreases by keeping published prices stable? Unlike in previous months, though, US WFB mills have a much greater shot at accomplishing this, primarily due to the increasing raw materials surcharge.
Besides scrap prices, most conditions in the domestic WFB market have remained unchanged over the last couple months. According to the latest monthly Metal Service Center Institute (MSCI) shipment and inventory report, while daily shipments of structural products were slightly less in October from September, 9,800 nt and 10,200 nt respectively, October inventory levels totaled 340,000 nt, down from 349,000 in September. As a result of fewer inventories, the total months of inventory on hand also decreased slightly from an estimated 2.6 to 2.5 months, the lowest since July.
On the import side, activity is quiet. Even foreign sources that were active just a couple weeks ago have basically pulled their offers from the table. However, foreign sources are expected to become more competitive sometime next month, as US domestic prices stabilize and imported lead times enter the end of first quarter. For now, lead times are too short and foreign sources are not even attempting to be competitive.
For instance, ArcelorMittal offers, mostly from Luxembourg and Spain, which were the most aggressive last month with some offers even reaching below $30.00 cwt. ($661/mt or $600/nt) FOB loaded truck US ports, are now completely quiet. Korean offers have also disappeared, although some have been loosely floated around at higher levels just to gauge the market. Offshore sources are in no rush to enter a market that is standing on shaky ground. However, some import offers are still being offered from across the border from Mexico at approximately $32.00 cwt. to $33.00 cwt. (705/mt to $728/mt or $640/nt to $660/nt) delivered to Houston. There are still not many takers, though.
According to preliminary license data from the US DOC, volumes of H-beams imported by the US decreased drastically from 12,203 mt in October to 4,557 mt in November. Monthly tonnage from Luxembourg decreased drastically from 5,846 mt in October to 189 mt in November. The top four exporters of H-beams to the US during November were Korea, at 1,889 mt; Spain, at 749 mt; Germany, at 718 mt; and Mexico, at 603 mt.