LOS ANGELES The U.S. steel beam market remains shrouded in questions, and the next few weeks could determine whether a $20-per-ton reduction is enough to cure this years reported price cutting on the product, market sources said.
Nucor-Yamato Steel Co., Blytheville, Ark., led the way this past week in cutting beam prices (amm.com, April 11), followed by Tampa, Fla.-based Gerdau Long Steel North America, the Columbia City, Ind.-based Structural and Rail division of Steel Dynamics Inc. (SDI) and Nucor Corp.s Berkeley, S.C., beam mill.
These moves reduced the published f.o.b. mill price on most core sizes of wide-flange beams to $785 per ton ($39.25 per hundredweight) from $805 per ton ($40.25 cwt) previously. The cuts followed a $22-per-ton reduction in AMMs consumer buying price for shredded automotive scrap in the Chicago market (amm.com, April 4), a key component in some mills raw material surcharges.
But market sources werent convinced that this past weeks published price cuts would end the recent pricing pressure on beams. This is especially evident in what has been a narrowing gap between prices in the distributor resale market and mill replacement costs, sources said, indicating that a substantial amount of tonnage is being acquired below book value.
While some mills and market observers blame imports for this pricing pressure, others maintain that a continuing battle for market share between the three major domestic beam producers is at least partially to blame. SDI appeared to address these concerns in its price change announcement, emphasizing that it reserves the right "to meet any discounted pricing offered to the market, including foreign-fighter pricing and back-ended rebates."
One Midwest beam distributor said his customers, who were aware of the pricing pressures on beams, had been holding off from buying until the mills reacted this past week to the drop in scrap tags. Since then, hes had "an influx of orders" from these customers, he said.
"People were waiting," for the mills to act, the distributor said, but he stressed that its still not clear if a $20-per-ton price cut would be enough. "The question is: whats going to happen after all these initial orders are absorbed?" he asked.
Other buyers pointed out that mill floor stocks in many cases remain high, which means theyre not obligated to book large tonnages until the markets course becomes clearor new discounts emerge.
The next crucial period for beams could be May through June, when the normal seasonal building cycle should start to pick up, signaling whether or not the non-residential construction market will finally start to show signs of a pickup after nearly five years of slumping demand. If not, some sources warn, buyers might start to think in terms of writing off the rest of the year.