NEW YORK The shuttering of Evraz Inc. North Americas Claymont, Del., operations will likely give steelmakers a reason to raise plate prices in a lackluster market, according to market participants.
Plate makers have faced flat market conditions in recent months, particularly due to steady but dull demand, competitive import offerings in certain regions and downstream competition.
However, the Chicago-based steelmakers Oct. 14 announcement that it would shutter the Claymont operations due to "subdued market demand" and a "high volume of imports" could shake the market slightly, at least for those operating in the Northeast, East Coast and parts of the Midwest, sources said, because the supply taken offline could cause an uptick in purchasing in the near term.
"I would expect (the other mills) to try and take advantage of this by raising prices," one Midwest service center source said. "(Evraz wasnt) producing a lot of tons, but theres going to be some speculation buys and a little spark where people are looking to stock up. I dont see it having a major impact, though, until we see demand really pick up."
Plate prices have declined slowly but steadily after logging a slight rise in the spring and again in late summer. Earlier this year, Charlotte, N.C.-based Nucor Corp., Lisle, Ill.-based SSAB Americas and Chicago-based ArcelorMittal USA LLC increased published plate prices $60 per ton between February and March (amm.com, April 5), which met some support but softened quickly. In July, all three steelmakers raised prices by $30 per ton, which had varying effects in the market (amm.com, July 11). SSAB and Nucor increased prices by another $25 per ton in August, and ArcelorMittal last week raised prices by $50 per ton (amm.com, Oct. 9).
Traders said imported plate hasnt been particularly competitive due to a narrow price spread between domestic and foreign material and uncertainty in the market.
"Claymont hasnt been producing significant quantities," one East Coast trader said. "Weve heard about some competitive plate offers, but theyre more rumors. I wouldnt blame imports, though, its more of the economics of the market."
Another trader agreed, saying the plate market has been rather uneventful this year.
"The plate market has been terrible. There hasnt been one price increase thats stuck all year round," according to a second East Coast trader.
Others speculated that this could give mills the push they need to follow ArcelorMittals recent price move, which has yet to be followed by other steelmakers.
"I havent heard a lot of people talk about the mill, but other mills will likely use this as an opportunity to improve their own pricing with an announcement," a second Midwest service center source said.
Claymont, which is Evrazs only flat products operation east of the Mississippi River, has an annual capacity of more than 500,000 tons, according to its website. It produces a combination of carbon, high-strength, low-alloy and pressure vessel plate between 0.25 and 5.5 inches thick.
The company said its production volumes for 2012 totaled 383,590 tons, with volumes for the first six months of 2013 at 189,025 tons.
One East Coast service center source expressed surprise about the announcement, particularly due to a number of upcoming bridge work projects such as the repair of the Verrazano-Narrows Bridge in New York.
"Evraz isnt set up for selling a lot of commodity plate, particularly because they have a lot of competition nearby," the source said. "But the bridge projects, that seems to be right up their alley and things that Evraz Claymont could do well. Theres definitely going to be a hole in that business. For all their other business, the 300,000 to 350,000 tons that theyve been producing annually will be a nice chunk of change for other steelmakers. And those guys will likely jack up prices because they can."