US wide flange beam market – panic has subsided

The wide flange beam market is finally starting to calm down domestically, with anxiety regarding shortages in beam supply coming to an end. The US beam mills are full through to the end of 2006, and demand continues to remain strong. However, things have calmed down significantly in the last month. The non-residential construction market is still going strong, but perhaps slightly less so than a month ago. Mining, processing and power plants, and energy-related industrial construction are all still going exceptionally strong. From our last WFB report one month ago, market players believed that the frantic buying activity of the summer would slow down within the next few months. Now, we are already beginning to see signs of this slowdown. Buyers are looking forward now, and come January and February, supplies will be in line with demand, and inventories will be healthy enough to end the buying frenzy completely. Some believe prices may even go down a little come the first quarter. For at least the duration of the month of October, beam prices will remain at September levels. Announced earlier in the month, Nucor decided to raise their Raw Material Surcharge (RMS) by $15 /net ton ($0.75 cwt.) and to decrease their base prices by the same amount, keeping transaction prices unchanged. Effective with shipments during the month of October, Nucor's RMS is $88 /nt ($4.40 cwt.). Chaparral Steel is also keeping net transaction prices at September levels, with an RMS of $88 /nt ($4.40 cwt.) for October shipments. However, scrap prices are giving signals of weakening again, and this will put some additional downward pressure on beam prices. Domestic prices for standard sized wide flange beams (ASTM A992, W10 x 10, W18 x 6, W24 x 7) still range from $33.25 cwt. to $33.50 cwt. ($733 /mt to $739 /mt or $665 /nt to $670 /nt) FOB mill. Where imports are concerned, there is still only a limited quantity coming to the US. However, the small amounts that are coming in are alleviating some of the pressure on domestic mills. Buyers in the US are showing more resistance than they were last month to buying imports since the “controlled entry” has eased up a little. They are looking for a good price and are not as eager to grab imported beams at extravagant prices. Shipping to the West Coast are both China and Taiwan, with offers at $33.50 cwt. to $34.50 cwt. ($739 /mt to $761 /mt or $670 /nt to $690 nt) FOB. Gulf Coast ports have seen small shipments from Poland and Brazil, as well as from the usual Arcelor mills in Europe. Census data from the United States Import Administration shows that so far for the month of September 2006 the top three exporters of H sections to the US were: China at 5,252.5 metric tons, Korea at 4,834.9 metric tons, and South Africa at 2,439.3 metric tons. Very small quantities indeed for such a huge market!