LOS ANGELES Steel beam buyers expect U.S. mills to keep their published prices flat this month despite a slight dip in a benchmark scrap price, they said.
AMM this past week lowered its consumer buying price for automotive shredded scrap in the Chicago marketused as the basis for some mills raw material surchargesby $10 per ton to $430 per ton (AMM, April 6).
Last month, the Chicago shredded scrap price remained unchanged, encouraging producers to keep the published mill f.o.b. transaction price for core sizes of wide-flange beams level at $840 per ton ($42 per hundredweight). Although a significant drop in the benchmark price often translates into lower beam prices, most buyers said this months $10 drop is likely not enough to trigger a change in official beam tags.
"Thats itits not going to change," one service center executive forecast of beam prices upon hearing of the new scrap benchmark. "It would just put instability into the market to go up or down when scrap moves $10 a ton."
But buyers also cautioned that continued stability depends on the current range of discounts not expanding significantly beyond the outer limit of about $3 per cwt below the published price.
"As the price of scrap goes down, theres more pressure to increase discounts," one distributor said. "If the mills can keep their discounting in this restricted range, theres no reason for more price-cutting."
Meanwhile, South Korea and Luxembourg appear largely responsible for an 18-percent rise in beam import permit applications to about 18,200 tonnes for March vs. preliminary February imports, according to U.S. Commerce Department data.
South Korea submitted applications for nearly 9,133 tonnes in March, up 35.1 percent from preliminary February arrivals, according to data through April 3. Luxembourgs permit requests for March nearly tripled to almost 6,031 tons, mostly in standard beams, the data show.