After a tumultuous first quarter, US wide flange beam (WFB) mills have been able to avoid further price decreases over the last two months; however, spot prices may still be fluctuating and import offers are becoming a bit more competitive.
Nucor-Yamato's announcement last week that it would leave WFB transaction prices unchanged in July, suggests that its previous $1.00 cwt. ($22 /mt or $20 /nt) price increase was not met with much opposition and is sticking, despite continued weak demand. As a result of the most recent announcement, the domestic list price of WFBs (ASTM A992, W10 x 10, W18 x 6, W24 x 7) remains at $35.75 cwt. ($788 /mt or $715 /nt) FOB mill. Nonetheless, SteelOrbis has learned that some beam suppliers are offering at below the published range by as much as $3.00 cwt. ($66 /mt or $60 /nt) depending on order size and specifics.
Furthermore, demand remains at unprofitable levels. According to the latest Metal Service Center Institute (MSCI) shipment and inventory report, while daily shipments of structural steel products slightly increased from 10,700 nt in April, to 10,800 nt in May, monthly shipments still decreased from April to May, from 235,500 nt to 215,700 respectively. And while monthly structural steel inventories declined from April, from 578,100 nt to 553,000 in May, May inventory overhang equated to about a 2.6-month supply at current shipping rates, compared to a 2.5-month supply in April.
Moving forward, US WFB prices will be largely dependent on what happens in the scrap market. If scrap trends neutral or up next month, WFB prices will likely follow suit. It looks like the scrap supply is relatively tight and that steelmakers have started increasing capacity slightly. For these reasons, US scrap prices are expected to go up slightly next month. However, even if scrap decreases next month, the overall feeling in the market is that WFB domestic mills will still manage to keep prices stable and avoid a decrease. The WFB market is still struggling to book business but at least it looks like prices have bottomed out, for now.
On the import side, foreign WFB offers to the US have gained a little more attention recently. While import bookings have not necessarily increased over the past couple weeks, traders and buyers have informed SteelOrbis that there is more interest in booking import offers for January 2010 deliveries. The consensus is that WFB prices will definitely be higher in January compared to the current levels, and some foreign mills may be willing to start booking for next year already.
Most WFB import offers are being seen from ArcelorMittal out of Europe, at around $29.00 cwt. to $30.00 cwt. ($639 /mt to $661 /mt or $580 /nt to $600 /nt) FOB US ports, which reflects about a $2.00 cwt. ($44 /mt or $40 /nt) increase from our report last month. On the other hand, Mexican mills have been heard to offer WFBs to Houston in the high $20s cwt. to the low $30s cwt. over the past couple weeks; however, SteelOrbis recently heard that Ahmsa, out of Mexico, is currently not offering any WFB to the US. One buyer told SteelOrbis, "You never know with Mexico. They can tell you one thing one day and then make you a great offer the next."
According to license data from the US DOC, volumes of H-beams imported to the US trended fairly steadily from April to May, totaling 4,081 mt and 3,940 mt respectively. June will likely be another weak month for WFB import volumes, with license data indicating only 2,257 mt imported in the month thus far. Furthermore, imported WFB tonnage from Luxembourg (origin of ArcelorMittal Europe's tons) has been inconsistent in recent months with imports totaling 1,680 mt in April; declining to only 224 mt in May, and totaling 732 mt in June, thus far.