LOS ANGELES Structural steel prices are expected to remain steady through year-end as buyers look for the market to improve in 2013.
AMMs consumer buying price for shredded automotive scrap in the Chicago market remained at $386 per ton this week, dampening speculation that wide-flange beam tags might weaken through the end of the year.
Previously, buyers thought that any significant fallback in the Chicago scrap benchmarkthe primary component of some mills raw material surchargesafter it rose $52 per ton in November could prompt mills to shave beam prices, which increased by $35 per ton for December.
"SidewaysIm good with that," said a source at a West Coast distributor, echoing the view of other buyers who now say prices will remain stable through the end of 2012.
Before AMM held Chicago shredded flat, most betting was that if scrap declined by $20 per ton or less, producers were likely to hold to their current published f.o.b. mill price of $780 per ton ($39 per hundredweight) on most core beam sizes. But a greater decline would have pressured them to cut prices to avoid discounting, closing out the year on an unstable note, buyers said.
"I was much more concerned with the possibility of a potential downdraft in scrap than with a rise," said an eastern service center buyer.
Shipments from producers floor stocks through November at the old price of $745 per ton ($37.25 per cwt) have ended, and the overwhelming majority of beams are now leaving mills at the new published price, sources said.
Most buyers are now placing their hopes for the end of a "spotty" market and recovery in beam demand on a pickup in nonresidential construction, which has lagged since the economic recession began in 2008. Domestic beam consumption is expected to rise only marginally to 4 million to 4.1 million tons this year from a little over 3.9 million tons in 2011, with most of the increase occurring in the first half of this year, according to a source.
However, while service centers appear to remain cautious, both the residential construction and automaking sectors have been showing signs of life, with hope that it could spread to the nonresidential sector. Scattered signs have been reported that contractors and fabricators are likely to begin quoting large nonresidential projects in the new year, especially if Washington lawmakers can avoid going over the fiscal cliff without any lasting damage.
"We think theres a lot of pent-up demand on the construction side," a market observer said.