LOS ANGELES A recent unexpectedly steep drop in a preliminary benchmark scrap price still leaves beams less vulnerable to price weakening than other parts of the long products market, steel buyers said.
AMMs consumer buying price assessment for shredded automotive scrap in the Chicago market slipped $30 per gross ton last weekmore than most long product buyers said they were anticipatingto $408 per ton.
"(Beam producers) have talked about an increase, but with this drop in scrap I dont know," one distributor source said.
On the other hand, buyers now see other long products, such as merchant bar, as "more vulnerable" to mill discounting after a $20-per-ton increase in January.
Some observers argued that last weeks cancellations of $20-per-ton price increases on reinforcing bar might have been a sufficient response to falling scrap tags and theres little need to roll back merchant tags as well, but not everyone agreed.
"If a drop this large in scrap was anticipated, the mills wouldnt have gone up on merchant bars last month," one service center buyer said.
"In hindsight, it was a brilliant move not to go up" on beams, another Midwest distributor said tongue-in-cheek, pointing out this wasnt a deliberate policy. Gerdau Long Steel North America was forced to rescind a $30-per-ton increase due to take effect with shipments Feb. 1 after its main rivals, Blytheville, Ark.-based Nucor-Yamato Steel Co. and the Structural and Rail division of Steel Dynamics Inc., Columbia City, Ind., failed to support the move (amm.com, Jan. 31).
Beam market reports vary widely, with some buyers citing slightly longer lead times and falling producer inventories while others claim theyve had no problem lining up mill floor stock.