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Beam price firming may draw imports

Keywords: Tags  wide-flange beams, Nucor-Yamato Steel, Frank Haflich

LOS ANGELES — Firmer wide-flange beam pricing has raised speculation that more increases could loom and that imports could become more attractive.

New business is now being quoted at the published March price of $820 per ton ($41 per hundredweight) f.o.b. mill for core sizes of wide-flange beams, not including competitive freight equalization programs or so-called corporate discounts involving all steel product purchases, most distributors said.

Moreover, the resale market, which has resisted rising prices, has shown some recovery.

"We’re starting to see some better pricing on the street," one Western distributor said, estimating that the last of the "foreign fighter" discounts will be gone by May.

A "steady increase in fabrication and wide-flange beam orders" is giving Fort Wayne, Ind.-based Steel Dynamics Inc. confidence that nonresidential construction, the prime market for beams, "is definitely in recovery," president and chief executive officer Mark D. Millet said last week during an earnings conference call.

While there’s little agreement among buyers on whether beam producers in the coming weeks will try to build on last month’s $20-per-ton hike, the possibility that tags could firm has boosted interest in imports, with recent prices from established foreign sources reported at $35 to $36 per cwt ($700 to $$720 per ton), ex-dock Houston.

"People are a little more receptive to buying foreign beams, but I don’t know if a lot more are being made available outside the usual major sources, such as South Korea and Europe," one trader said, referring mainly to the European mills of Luxembourg-based ArcelorMittal SA.

Some buyers also have seen offers from India on a limited range of sizes, while others said traders are now trying to make deals work with mills in Japan and Taiwan that previously were competitive on commodity beam sizes.

But there’s still uncertainty about how much recent price optimism is due to a sustained recovery in nonresidential construction or instead to supply bottlenecks or "logistical issues" that have tightened availability this year. Among these were delivery delays due to severe winter weather, a shortage of rail cars and continuing glitches with computerized mill order input systems that have plagued at least one producer but might now be easing, market sources said.

"It’s better now, but it’s nowhere as good as what the mills want us to think," a Midwest distributor source said of overall demand for beams.

Market sources also said that at least one mill, Nucor-Yamato Steel Co., Blytheville, Ark., has slated maintenance outages in various sections of its Blytheville facility for the weeks of May 25, June 1 and June 8. A spokesman for Nucor Corp., Charlotte, N.C., a joint-venture partner in Nucor-Yamato, couldn’t be reached for comment.

Meanwhile, a 24-percent jump in nonresidential building helped push new U.S. construction starts up 7 percent in March vs. February to a seasonally adjusted annual rate of $521.4 billion, according to the McGraw Hill Construction unit of McGraw Hill Financial, New York. Manufacturing facility starts soared by 140 percent while office construction rose 17 percent.

Optimism for a recovery in nonresidential construction is being shored up by "a rising volume of bank lending" for commercial real estate ventures, energy related manufacturing projects and institutional building, Robert A. Murray, chief economist for McGraw Hill Construction, said in a statement.

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