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Gerdau beam price increase seen as challenge

Keywords: Tags  steel beams, beam prices, wide-flange beams, standard beams, Gerdau Long Steel North America, Nucor-Yamato Steel, Steel Dynamics, Structural and Rail division Commerce Department

LOS ANGELES — Gerdau Long Steel North America has launched the first attempt by a U.S. mill to boost beam prices in more than six months, but buyers see a challenge ahead in breaking a five-month logjam in published and transactional tags.

Gerdau Long Steel North America told customers late last week it would raise the transaction price of beams by $20 per ton ($1 per hundredweight) effective with orders placed Nov. 4. Confirmed orders made by the close of business Nov. 1 will be price-protected if shipped by Nov. 15, the Tampa, Fla.-based producer said.

Market sources hadn’t yet heard from the other two major U.S. beam producers, Blytheville, Ark.-based Nucor-Yamato Steel Co. and Fort Wayne, Ind.-based Steel Dynamics Inc.’s Structural and Rail division in Columbia City, Ind.

The last price increase attempt by domestic beam producers came in April, although prices retreated within a month and until recently remained flat, both on posted and transactional levels. Published f.o.b. mill prices on core sizes of wide-flange beams have remained at $765 per ton ($38.25 per hundredweight) since May. However, discounts on a delivered basis have ranged from $2 to $3 per cwt, depending on the size of the buyer and regional competitive conditions.

"An increase announcement is great, but the question is: ‘What’s the transaction price?’ " one Midwest distributor asked, adding that other mills could "drag their feet" before reacting to Gerdau’s move in order to attract hedge buying.

Moreover, some mills in recent weeks were selling beams at about $1 per cwt below prevailing discounted levels, market observers said. These sources speculated that any reduction prior to a price increase attempt might help clear out surplus mill floor stocks, as well as fill out rolling schedules through year-end, bolstering producers’ ability to stick by an increase.

"A lot depends on scrap," an eastern service center executive said, citing recent signs of stabilization in the raw material. "If scrap goes up only $10 a ton, then it will be difficult to put through an increase. But if it rises $30 a ton, chances will be a lot better (for an increase)."

Meanwhile, import permit applications for October totaled 11,958 tonnes through Oct. 31, down 49.8 percent from 23,806 tonnes in September, according to the U.S. Commerce Department’s Enforcement and Compliance.

Standard beam imports fell 60.3 percent to 4,182 tonnes in October, led by a nearly 79-percent drop in imports from Russia to 1,364 tonnes from 6,487 tonnes and an 11.6-percent fall in arrivals from Luxembourg to 2,071 tonnes from 2,343 tonnes.

Wide-flange beam imports fell 41.4 percent to 7,775 tonnes in October, led by a 25.6-percent drop in material from South Korea to 4,284 tonnes from 5,759 tonnes in September.

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