NEW YORK Domestic mills have succeeded in boosting carbon steel plate prices in the past week, but the outlook is still uncertain, sources said.
"From what I can tell, it seems the increase is sticking at least in the short term," said one mill source. "A lot of projects came off the sidelines, and we were pretty much at the bottom. I still think the conversation in the market is that things arent so robust that you can jam an increase through and move on. Were watching the game closely."
In recent weeks, the three largest U.S. plate millsNucor Corp., SSAB Americas and ArcelorMittal USA LLCall hiked base prices on discrete plate by $30 per ton. The move came after the last round of increases effectively fizzled and plate prices took a dive through the summer.
However, while demand for plate has softened this summer, market participants say that mills have generally remained united in their push for higher tags.
"Plate (prices) have been pretty firm, and the mills are holding the line and trying to play ball," said one Northeast service center.
Discrete plate transactions last week were pegged at $720 per ton ($36 per hundredweight), sources said, up from the previous weeks prices of $700 per ton ($35 per cwt). This suggests the realization of an approximate $20 per ton gain out of the $30 per ton increase.
Imports, which traditionally keep domestic prices at bay, have had little impact in the U.S. market this year. U.S. Census Bureau preliminary data shows that in June, cut-to-length plate imports totaled 64,449 tonnes, a far cry from 102,056 tonnes in June 2012. License data through July 24 indicates some 41,002 tonnes of material will hit U.S. shores compared with 101,653 tonnes a year ago.
"Imports are not a concern," said a second mill source. "Volume-wise things have been no better or worse than where they have been in the last few months. But one thing thats been quite evident at the moment, import numbers are down."
The second quarter has been particularly hard on the financial results of U.S. mills. Earlier this month, SSAB Americas, a subsidiary of Swedish steelmaker SSAB AB, posted a second-quarter loss on lackluster demand, its first dip into the red in four years (amm.com, July 19).
Other mills said, however, that prices had increased due to factors ranging from rising sheet prices to lean inventories at the distribution level as well as unsustainably thin sales margins and not due strictly to supply and demand dynamics. As a result, distributors questioned whether the higher tags are sustainable.
"Things are shaky. As far as Im concerned, the mills got maybe half of the increase," said one Midwest service center source. "The fact is that when were talking about (a) commodity, things should be supply-demand driven. And when its not supply-demand thats driving up the price, theres a problem."
And while the second-quarter looked difficult, some added that there are potential bright spots ahead, particularly in strong automotive, truck and energy end markets. Others are more cautious.
"I think the third quarter will be a correction quarter. There are some signals that things will pick up," said the first mill source.