LOS ANGELES The
structural steel market continues to tread sideways, with most
buyers anticipating a holding pattern through the third quarter
and possibly until the end of the year.
While some beam buyers
said they think demand could turn around later in the year and
a few said that there has actually been an improvement, most
said they expect the rest of 2013 to be flat as they await a
real recovery in nonresidential construction.
"Were hoping for
steady; weve minimized our inventory," a Midwest
distributor said. "At this point, we have no outlook for an
But steady demand does
not necessarily mean steady pricing, sources said. In early
June, mills told customers they were holding published
transaction prices for structural products unchanged,
whichin the case of wide-flange beamsmeans the
published f.o.b. mill price on core sizes would stay flat at
$765 ($38.25 per cwt).
foreign-fighter and other discounts are included, medium and
large service centers are reportedly buying beams at the mill
in the range of $720 to $740 per ton ($36 to $37 per cwt).
"I havent bought
a single beam in the last six months that wasnt
discounted," one West Coast distributor said.
buyers are waiting to see what will happen with the raw
material surcharge. Traditionally, beam mills announce their
raw material surcharges after AMM settles its consumer
buying price for shredded automotive scrap in the Chicago
market, but in recent months, major mills have set their next
months steel prices before the scrap trade ends.
Late last week,
AMM reduced its consumer buying price for shredded
automotive scrap in the Chicago market by $8 per ton to $360
per ton (
amm.com, June 7), but most structural mills had
already announced their plans to hold prices flat.
Whatever the fate of
the surcharge, market players said it appears few steel buyers
will look at raw materials the same way they did before 2004,
when a global steel market recovery and soaring metallics costs
gave rise to the surcharge, which in turn provided the mills
with a rationale for boosting prices.
"When they implemented
the surcharge, it brought a whole new thought process into the
industry," a Midwest distributor said.
Buyers noted this week
that theyve learned their lesson about scrap all too
well, expecting a steel price increase when scrap is rising but
lobbying the mills to cut prices when its falling, and
their practice of routinely tracking its market swings will
continue with or without formal surcharges.
"Thats not going away," a Midwest service center
executive said, adding that buyers "are absolutely conditioned"
to follow scrap closely.