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
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.