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Gerdau, SDI cut beams again in unusual move

Keywords: Tags  steel, structural, beams, channels, Gerdau Long Steel, SDI, Structural and Rail division, Nucor-Yamato Frank Haflich

LOS ANGELES — Structural steel prices have become a moving target as two of the three major U.S. producers posted their second reductions in a month.

Gerdau Long Steel North America, in what most market observers viewed as an uncharacteristic downside leading move, reduced its published beam prices by $20 per ton effective May 1 due to “increasing levels of competition from both domestic and foreign producers,” the Tampa, Fla.-based producer said in a letter to customers.

Gerdau’s move was quickly followed by the Columbia City, Ind.-based structural and rail division of Steel Dynamics Inc. (SDI), which said it would drop published transaction prices on wide-flange beams and channels by $20 per ton effective May 2.

The cuts by Gerdau and SDI would bring the f.o.b. mill price on core sizes of wide-flange beams to $765 per ton ($38.25 per hundredweight), down from a previous level of $785 per ton ($39.25 per cwt).

Meanwhile, Nucor-Yamato Steel Co., Blytheville, Ark.—generally viewed as the industry pricing leader and usual initiator of published pricing moves—had yet to announce a change, market sources said.

AMM’s consumer buying price for shredded automotive scrap in the Chicago market, a key component of some mills’ raw material surcharges, fell by $22 per ton in April, and early indications are that prices will decline by a further $20 per tonne in May (, May 2).

Market sources said they were hard-pressed to recall a time in recent years when Gerdau was the first to announce a cut in published prices.

But they also noted that traditional beam-buying patterns have been disrupted as distributors, instead of ordering on an ongoing basis, have held off placing tonnage not only until monthly scrap updates are posted, but also until they accumulate a requirement large enough to command discounts that have lately ranged up to $60 per ton.

“I’m glad they did it now,” one distributor said of Gerdau’s leading move, maintaining that some buyers now sit on the sidelines for two weeks out of the month as they wait for beam prices to settle.

SDI told customers in its announcement that it reserves the right to meet competitive measures by other mills—“including up-front discounting, foreign-fighter pricing and back-ended rebates”—which market sources agreed reflects the wide scope of price-cutting.

While discounting is often attributed to lower-priced imports into such markets as the West Coast, buyers in other parts of the country blame it on the failure of domestic beam consumption to pick up this year, leaving U.S. mills far below capacity.

“People are sensing that prices are going south and they’re doing whatever they can to get rid of higher-priced inventory,” a Midwest distributor said of his competitors.

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