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Mills aim to cut discounts on beam products

Keywords: Tags  steel, beams, foreign fighter, West Coast, steel mills, Frank Haflich

LOS ANGELES — U.S. beam mills are attempting to reduce some of the largest discounts on structural steel even as they move to raise published prices, according to market sources.

Major producers this week posted $1-per-hundredweight ($20-per-ton) increases on beam products, bringing the published f.o.b. mill price on core beam sizes to $41 per cwt ($820 per ton) from $40 per cwt ($800 per ton) previously (, March 10).

But even before the published price increase was announced, mills had been moving to reduce the largest discounts in the far West, where delivered prices to larger service centers—under what’s popularly called "foreign fighter" programs—have reflected implied discounts of $3 per cwt ($60 per ton) or more.

Before this month, the foreign fighter price was reported at $41 to $41.50 per cwt ($820 to $830 per ton) delivered to the West Coast for the most frequently ordered beam sizes, sources said. This suggests that domestic beam producers, all of which are east of the Rockies, had been absorbing estimated freight charges of $3.50 to $4.50 per cwt ($70 to $90 per ton) normally involved with shipping to the region.

But mills indicated to large distributors that, starting in March, they intended to incrementally reduce the discount in monthly steps of $1 per cwt, returning to book price before the summer. This would suggest March foreign fighter prices of $42 to $42.50 pet cwt ($840 to $850 per ton), delivered.

It is too early to gauge the success of this attempt, with orders turning up in anticipation of the discount reduction and this week’s published price increase, both of which market sources said were sufficiently telegraphed by the mills to encourage hedge buying.

The success of the moves to raise prices likely will be judged on their impact on distributor resale prices on the West Coast, which market sources describe as heavily influenced by imports. These "street" prices were in a range of $44 to $45 per cwt ($880 to $900 per ton) before this week’s domestic published price increase.

"Why should I pay even a foreign fighter price of (about) $41 or $42 per cwt ($820 to $840 per ton) delivered when I’m going to have to sell beams only $3 per cwt ($60 per ton) higher?" a distributor asked. Market sources noted this week that it is too early to tell how strongly resale tags will move up.

"Right now it’s quiet on the street," a service center executive said about the resale market. "We expect that we’ll have a better idea of just how much these new prices are sticking after the smoke clears in a week or two."

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