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Beam outlook flat but buyers vigilant

Keywords: Tags  structural steel, wide-flange beams, Chicago consumer buying price, Frank Haflich

LOS ANGELES — Structural steel buyers are expecting published mill prices for wide-flange beams to remain flat after a benchmark scrap price was unchanged, although they’re keeping an eye out for signs that some deals might emerge in the coming weeks.

This week, AMM held its consumer buying price for shredded automotive scrap in the Chicago market level with last month at $386 per ton.

“That ought to mean flat pricing,” a Midwest buyer said of the steady Chicago scrap price, noting what he said was little pressure from imports. “We certainly don’t expect an increase, and why would they (mills) lower it?”

Until now, buyers said, domestic mills have exercised a remarkable amount of discipline in maintaining prices at their published level of $780 per ton ($39 per cwt) f.o.b. mill for core beam sizes.

Still, with demand remaining below historical levels and most beam lines still operating significantly below capacity, other market sources said they wouldn’t be shocked to see at least one producer move lower in order to boost its market share.

A minority of service center buyers said they’ve been told by their mill representatives not to book an order with their competitors without calling first, which to some indicated there might be some “wiggle room” in prices. But most would rather not see that develop.

“I don’t want any deals,” insisted a West Coast distributor, who maintained that a decrease could mark the beginning of a slippery slope that leads to even greater price-cutting as the year goes on—a trend that invariably spreads to warehouses’ resale price.

However, he acknowledged that he’d be obliged to jump at any discount because his competitors would likely do so as well.

“If they do cut the price, I hope they’ll do it the smart way: very quietly,” said another service center buyer about the mills.

Meanwhile, arrivals of both wide-flange and standard beam imports fell by 50 percent month over month in December to 9,050 tonnes, down from about 18,090 tonnes in November, according to import license application data from the Commerce Department’s Import Administration.

Leading the falloff was Luxembourg, whose license applications for December were down 64 percent to about 2,841 tonnes. Applications for Japanese imports plummeted 92.9 percent to 242 tonnes in December.

Only imports from Mexico are scheduled to rise in December; that country’s license applications went up to 2,818 tonnes in December from just 957 tonnes the month before.

Some observers attributed the falloff in license applications at least in part to a large service center chain’s reluctance to bring in additional material before year-end in order to report the maximum number of annualized inventory turns.

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