PALM DESERT, Calif. The
domestic steel plate market is seeing renewed strength in a
number of end-use sectors, but its the need to achieve
profitabilityrather than the reported uptick in
demandthat appears to be behind recent price hike
announcements, an ArcelorMittal USA LLC executive says.
Jack P. Biegalski, director of
plates and product control for Chicago-based ArcelorMittal,
said that when questioned by customers about the announced
price increases despite what theyve described as a lack
of demand, his response has been straightforward: Producers
were "not making any money" on plate at the earlier prices.
"Weve taken demand out of
the equation" in plate pricing, Biegalski told the Association
of Steel Distributors 2013 Annual Convention in Palm
Desert, Calif., on March 21.
Biegalskis comments came
two weeks after Nucor Corp. and SSAB Americas announced a
second $30-a-ton price hike on carbon plate products and
ArcelorMittal USA announced a single $60-a-ton hike (
amm.com, March 8).
Those increases appear to have
had some success, with AMMs transacted price
rising slightly to $720 per ton ($36 per hundredweight) f.o.b.
mill in mid-March from an average price of $710 per ton ($33.50
per cwt), with a few market playersparticularly in the
Southeastreporting even more pricing strength.
After the recent round of price
hikes, "it appears the market is holding together on commodity
plate," Biegalski said.
According to Biegalski, some of
the current plate demand is from non-traditional segments, such
as energy-related rail cars, which are growing in popularity as
pipeline approvals stall. Biegalski described energy-related
rail cars as "one of the hottest segments were dealing
with," creating a likely requirement for "thousands and
thousands" of rail cars to transport petroleum products.
While demand from machinery
manufacturers is down in the first half of this year, the
outlook for the sector also remains good, Biegalski said.
Moreover, although activity in wind towers is also down, he
said, some customers see the possibility for a pickup in the
second half of 2013 with reinstatement of federal tax
incentives that were allowed to expire at the end of last year.
Service center inventories are also coming down, lending the
market some support, he said.
Meanwhile, infrastructure has
been flat, Biegalski said, but there is potential pent-up
demand, such as the proposed rebuilding of New Yorks
Tappan Zee Bridge. That project, for which ArcelorMittal is
quoting steel, would require "a couple hundred thousand tons"
of bridge plate along with additional piling, he said, more
than one mill could provide on its own. But he also indicated
he isnt confident that state and local officials will
necessarily act quickly on the Tappan Zee rebuild.
At the same time, market players
continue to watch for signs of renewed import activity, which
could change the market dynamic. Steel plate imports pulled
back in January and February, with 63,037 tonnes of coiled
plate and 44,723 tonnes of cut-to-length plate arriving in
January and 84,498 tonnes of coiled plate and 87,171 tonnes of
cut-to-length plate licensed to arrive in February, down from
volumes above 100,000 tonnes a month throughout much of 2012.
Through March 19, only 37,969 tonnes of coiled plate and 36,134
tonnes of cut-to-length plate have been licensed to arrive
stateside this month, according to U.S. Department of Commerce