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Plentiful supply, softer demand hit steel plate

Keywords: Tags  steel plate, domestic mills, European plate, steel traders, steel service centers, catherine ngai

NEW YORK — Citing plentiful supply and weak demand, U.S. buyers of steel plate say the market is facing downward pressure and could see prices soften in the weeks ahead.

Buyers had said earlier this month that market conditions looked promising, with many consumers contending a typical January uptick was just around the corner (, Jan. 10). However, that expected pickup appears to have stalled due to oversupply at domestic mills, sources said.

"The mills look as if they have good amounts of inventory on the ground. I don’t think the market is very strong. And things are softening," a Midwest service center source said. "There’s so much capacity in the market right now, especially on the coil side."

A mill source who had anticipated the usual seasonal uptick in January agreed that a turnaround remains to be seen. "We expected a little spark in the first quarter, but we don’t see it at all. Inquiry levels are quite dead, even after we perceive it to be a good price," he said. "There seems to be a standstill in the market."

Domestic mills are said to be still quoting at around $38 per hundredweight ($760 per ton) for discrete carbon plate in the Midwest and Southeast. However, the majority of market players said that $37 per cwt ($740 per ton) f.o.b. Midwest mill is the average buying price, and some said they expect that price to fall further if current oversupply conditions persist.

"We’ve seen some stock priced attractively, but it looks like most of the stuff we’ve needed, the mills have on the floor. This means that lead times are shortened and discounts are to be had because the mills are hungry for work," a fabricator source said.

In the South, transacted plate prices are even softer, sources said, citing sales as low as $35 per cwt ($700 per ton) due to competitive imports, which market participants pegged at $35.50 to $36.50 per cwt ($710 to $730 per ton) for medium plate via the Port of Houston.

With domestic plate prices—particularly in the South—on par with import offers, foreign steel is gaining little traction, traders said. Some 49,155 tonnes of cut-to-length plate were poised to hit U.S. shores in December, down 19.9 percent from November’s final figure of 61,350 tonnes and 28.2 percent lower than a year earlier, according to license data from the U.S. Commerce Department’s Import Administration.

On the other hand, imports of plate in coil were expected to total 121,948 tonnes in December, down just 1.3 percent from November’s final figure of 123,541 tonnes and up 67.2 percent from December 2011 largely due to a year-over-year jump in imports from Germany.

"On the import end, the really cheap steel is now out of the market. I know some of the mills are desperate to gain market share because the markets are so slow," one trader said. "Plate is very stable right now, but the spot market is weak because domestic lead times are almost nothing. Things are very fragile right now."

Buyers said they are expecting a few shipments of European plate in coming weeks that was booked last year at prices around $34 to $35 per cwt ($680 to $700 per ton). However, most buyers have hesitated to take the plunge on more imports due to lackluster market conditions and domestic oversupply.

"We haven’t bought any imports (recently) because the pricing isn’t attractive enough. In particular, we’re seeing pricing from some large mills very cheap in the market," a southern service center source said. "Things are slow, really slow. Before the end of last year, half of our customers were busy and half weren’t. Now, one-third of our customers are busy and two-thirds aren’t. It’s disconcerting. I think this has to do a lot with the confidence in the economy and the government."

Rumors of a price increase have circulated in the steel sheet and plate markets in recent weeks, but plate customers maintain that a price increase is unlikely to be effective, considering the large volumes of inventory available.

"I heard recently that the mills are looking for a price increase. Based on what’s happened in the market, I’m not sure what will happen," a second Midwest service center source said. "I don’t think right now a price increase would really do anything. It’s not going to spur on anyone to place more tons. And you can get product in less than three weeks. I don’t see the lead time numbers moving anytime soon."

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