CHICAGO The steel plate market could be poised to move higher after one domestic producer raised prices.
A round of price increases wouldnt come as a surprise, given long domestic lead times, strong end-user demand, higher input costs and supply constraints, market sources said in reaction to the increase by Charlotte, N.C.-based Nucor Corp., adding that it wasnt immediately clear whether other major plate producers planned to follow.
Nucors plate mill group increased transaction prices for all new plate product orders by a minimum of $30 to $40 per ton ($1.50 to $2 per hundredweight), depending on the product, effective immediately (amm.com, Aug. 18).
Lead times for domestic plate mills are generally out to October or November depending on the mill, market sources said. "Based on current lead times, I think (mills) will try to make them stick," one steel fabricator said.
AMMs carbon plate price stands at $43 per cwt ($860 per ton), although some sources reported prices as low as $41.50 per cwt ($830 per ton) near ports, where import competition is higher.
The jury is still out on whether and to what extent Nucors price hike will stick, especially until it becomes clear how other domestic mills react, market sources said. Assuming other mills follow, plate prices could jump to about $42.50 per cwt ($850 per ton) along the Gulf Coast and $44 per cwt ($880 per ton) or more in the Midwest, they said.
Plate demand is strong across most end markets and particularly so in the energy sector, market sources said. At the same time, nonresidential construction demand is soaking up big tons from domestic mills for projects like the replacement of the Tappan Zee Bridge in New York, they said.
"Demand may not be fantastic, but its there and its steady. And with a little tightening in availability (increased prices) make sense," one mill source said.
Tightened spot supplies come not only from improving contract-based markets but also from a maintenance outage at Lisle, Ill.-based SSAB Americas facility in Montpelier, Iowa, that is slated to run from late October into early November (amm.com, Aug. 14).
Both mill sources and plate consumers were generally bullish about the prospects for the domestic market, especially as demand across most end-user markets was said to be strong or improving. Weakness was reported in the agriculture sector, although market participants questioned whether that swoon would last or was instead a knee-jerk reaction to lower corn prices.
In addition, service center demand could slow as inventories are replenished, some market sources said. With inventories in balance, service centers will increasingly buy at the same rate that they ship instead of buying more than theyre shipping, they said.
U.S. service centers carbon steel plate shipments stood at 375,600 tons in July, up 12 percent from 335,300 tons shipped in the same month last year, according to the latest Metals Service Center Institute (MSCI) data. Service centers carbon plate inventories, meanwhile, totaled nearly 1.1 million tons (2.9 months supply), up 9.1 percent compared with July 2013.
Increased import levels also pose a threat to domestic pricing, although rising prices and long lead times for offshore material could mitigate the danger, according to market sources.
The U.S. plate in coil imports were poised to reach 229,245 tonnes in July, according to license data from the Commerce Departments Enforcement and Compliance division. Thats nearly triple the 77,924 tonnes imported in the same month last year. Imports of cut-to-length plate, meanwhile, looked set to more than doubled to 129,415 tonnes from 53,254 tonnes in the same comparison.
While offshore prices might be rising along with the domestic market, some buyer sources questioned whether high import volumes, increased import offerings and the historically slower year-end market would lead to an eventual reversal in prices.
"Its a perfect storm. Mill lead times are long. Their order books are strong. And so they probably think they can get away with it," one service center source in the Midwest said. "But they might also be trying to build up a price advantage, so they have a higher perch to fall from."