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Buyers bristle at latest steel plate increases

Keywords: Tags  steel plate, plate prices, price announcement, A36, steel, steel prices, Michael Cowden

CHICAGO — Steel plate prices have moved up over the past week following a round of increases by several major domestic producers.

However, the increases are not sticking in full due to pushback from some service centers and downstream customers, who market sources said had not been as fierce in opposing price hikes announced earlier this year.

AMM’s plate price assessment increased to $44 per hundredweight ($880 per ton) from $43 per cwt ($860 per ton) previously. The increase is less than the $1.50-per-cwt hike announced by domestic plate producers (, Aug. 22).

A previous round of price increases in June was largely accepted by buyers (, June 20), market sources said, but the current increase—and questions about its necessity and timing—may have disrupted order entry.

Buyers likely would have continued to place orders with their normal suppliers and at normal rates at June price levels, market sources said, but the unusual timing of the latest increase and spiraling tags for U.S.-made plate have given consumers cause to reconsider their options. That’s in part because the current increases are effective with November shipments for some mills, and the latter half of the fourth quarter often sees slower business activity, market sources said. Others also criticized what they saw as a widening gap between import prices and domestic tags.

Consumers will continue to purchase domestic steel for infrastructure projects that require material that is melted and poured in the United States, market sources said, but even consumers that usually lean toward buying domestic steel are considering import offerings.

Offerings from European mills—said to be increasing by the day—may give U.S. mills a run for their money, market sources said. Some consumers are already considering moving big buys of carbon-grade A36 to European mills.

The price risk of ordering from Europe usually outweighs the potential benefits, market sources said. But with domestic prices high compared with the rest of the world—and given the reliability and quality of European mills—ordering high-priced U.S. steel for the fourth quarter could be riskier than sourcing offshore, they said.

Even some mill sources said they had reservations about the latest round of increases, with some said to have offered discounts to customers before later announcing price increases—effectively making the increase less than the officially announced price hike.

Still, other sources said the increase would stick in full if given time, and that anyone suggesting plate prices were moving down might be using out-of-date assumptions about how the market behaves, especially in a year that saw the first quarter plagued by weather-related outages and construction delays. Such factors mean 2014 may not follow the typical seasonal patterns seen in past years, they said.

Among the big question this year, for example, is whether import volumes peaked in June or whether they will peak in September, as they have before, market sources said. If imports hit their high-water mark in June, current price increases have a good chance of sticking, although they will be on shakier ground if import volumes peak later in the year, they said.

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