NEW YORK Wide-flange steel beam buyers are awaiting new price announcements in the wake of a hike in a scrap benchmark that they expect will trigger a reversal of two months of declining tags.
AMM this week raised its consumer buying price for automotive shredded scrap in the Chicago market by $52 per ton to $387 per ton (amm.com, Nov. 7). This rebound follows two months of declines for the key raw material, which saw prices fall a total of $75 per ton during that period.
Following last months $47-a-ton drop in shredded prices, major producers lowered beam prices by $30 per ton, putting core sizes of wide-flange beams at $745 per ton ($37.25 per cwt) f.o.b. mill (amm.com, Oct. 11).
But now that shredded prices are on the rise, buyers say beam prices are due for a turnaround.
Most buyers said they expect a beam hike totaling at least half of the scrap increaseor $26with a majority looking for a substantial increase of $40 per ton or more. However, a few market sources argue that a smaller hike is more likely as the mills await confirmation next month that higher scrap pricesthus, stable beam pricescan be sustained.
In any case, most buyers expect mills will act quickly with the expected increase, especially because some buyers already began to lock in material before the new Chicago benchmark was posted amid growing speculation that scrap prices were strengthening. Mill inventories were reportedly sufficient to support this demand.
"If people have a need, theyre already buying like crazy from floor stock," said a service center executive.
"There certainly was some hedging going on, theres no doubt about it," another industry source agreed.
Any delay in posting new published prices, on the other hand, could signal to the market that producers have targeted filling their beam mills with as many tons as possible, even if they have to do it at the old, lower price, sources said. However, with little current threat from imports, even in a somewhat weak domestic market, most buyers say an increase is likely in the cards.
Another question is whether a new price would be effective next month, as has been customary in recent years, or immediately. Last month, Tampa, Fla.-based Gerdau Long Steel North America said any future price change, "whether it is a decrease or increase," will be effective immediately upon announcement (amm.com, Oct. 12). However, historical pricing leader Nucor-Yamato Steel Co. hasnt publicly signed on to this policy change, and few observers said they believe it could fly without the support of the Blytheville, Ark., producer.