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 data.