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Mills, buyers clash over beam price discounts

Keywords: Tags  steel, beams, wide-flange beams, beam imports, Frank Haflich

LOS ANGELES — Structural steel producers and several of their customers are caught in a tug of war over prices as mills continue to push for the elimination of discounts.

Beam producers earlier this month increased the published f.o.b. mill price on core sizes of wide-flange beams to $41 per hundredweight ($820 per ton) from $40 per cwt ($800 per ton) previously (, March 10).

Mills are insisting on charging their published prices as they move to eliminate discounts of $20 to $60 per ton—or more, in some import-sensitive markets—that have typified the market for the past year or more, market sources said.

But several of their customers, particularly distributors, remain skeptical.

Service centers maintain they have yet to see signs that the market is capable of supporting full published prices and worry that any future “return to earth” could leave them with expensive inventory.

“The jury’s still out, but I’m afraid there may be a downside in pricing before there’s an upside,” a Midwest distributor source said, adding that large distribution chains will use their buying leverage to pry discounts from the mills.

Beam buyers also questioned why prices should be firming when falling scrap prices in recent months have helped contribute to an erosion in sheet tags

“The disparity between flat-rolled and beams is ridiculous,” a service center executive said. He and others claimed that the mills’ insistence on holding prices could open up a “giant opportunity” for overseas beam mills.

“Certainly that’s a possibility, but there’s not that much import available now,” a second service center executive said. He believes the market is actually ripe for firmer prices, judging by the mills’ claims of growing backlogs among fabricators who buy direct.

Most buyers agree that imports have maintained a low profile this year, but said that U.S. mills’ elimination of beam discounts could open the door for more foreign product. Even the Japanese, who haven’t played a significant role in the U.S. beam market lately, have indicated they may be ready to send more material, given the recent weakening of the yen, some sources said.

Several buyers said that mills are exploiting rail car shortages and weather-related shipment delays, noting that some of their own shipments are running up to six weeks behind. They warn that the mills’ leverage could vanish once these problems are resolved.

“There are weather issues, shipment issues and producers are still struggling to get cars,” a buyer said.

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