North American producers stand poised to implement hikes more than $100 per ton on carbon steel plate products as rising input costs continue to drive the market higher, market sources said Monday.
While producers had made no formal announcements as of late Monday, multiple sources told AMM that sales representatives from various mill suppliers had contacted them and informed them that an increase was imminent. The major U.S. plate product producers are Nucor Corp., Charlotte, N.C.; ArcelorMittal USA, Chicago; SSAB North American Division, Lisle, Ill.; and Evraz Inc. North America, Portland, Ore.
The leading Canadian producer is Essar Steel Algoma Inc., Sault Ste. Marie, Ontario. "There is an increase coming," one Midwest plate buyer said. "They've (Nucor) told us they are raising prices. We just don't know what the number is yet." The number for that buyer was expected to be formalized in meetings Monday afternoon. "We haven't heard anything official. But it's coming. All of the plate mills are increasing prices. It's all (based on rising) scrap costs," another Midwest plate buyer said late Monday. "There is a lot of confusion in the market right now about where prices are. The waters are pretty muddy. But (producers) are all going for an increase. Everyone is trying to get in front of scrap." Several other buyers, including service centers and end-user customers, said they, too, had been told to expect a plate price increase, though few could offer specifics. "Let me put is this way," one Midwest service center source said. "They (plate producers) are holding all the cards. Their lead times for plate are out and scrap prices are way up. They are going to react." Severe winter weather throughout much of the United States has slowed the flow of ferrous scrap into yards nationwide over the past month, pushing ferrous scrap prices up about $75 per ton in the past month (AMM, Jan. 10).
Mills have reacted with product price hikes, although buyer sources said last week that plate prices had remained in something of a holding pattern as the market waited for established scrap prices. Prices for cut-to-length and coiled steel plate were running in the range of $800 per ton ($40 per hundredweight) in late November and early December but were expected to move above $900 per ton ($45 per cwt)”and perhaps to the range of $910 to $920 per ton ($45.50 to $46 per cwt) if price increases landed in the expected range. "I think you're looking at an increase of $100 or $110 per ton," the Midwest service center source said. "That's a big jump, but demand is good. Lead times have stretched out a little. You can't do something like this just on costs. There has to be some demand. Let's face it, you can't have demand for scrap without demand for steel, and it's the domestic market for scrap. There is not exuberant export demand for scrap." A second Midwest service center source indicated plate prices are already inching up based on costs after holding steady for much of the past six weeks. Plate typically lags carbon sheet pricing, he said, adding that plate producers are now moving to recoup lost margins in a manner similar to that of sheet producers, who have boosted flat-rolled pricing six times ”totaling about $240 per ton”since mid-November. "I don't think you can get anything (for a spot market plate price) as low as $800 (per ton) right now," the second Midwest service center source said. "I think you're looking at at least $850, and it looks like it's up from there. We're getting to $800 hot-rolled (sheet after price hikes announced last week for flat-rolled products), so you're going to see plate go higher. I don't think $900 (per ton as a price target) is an unreasonable number at this point." While scrap prices are the main driver behind a proposed plate price increase, sources said U.S. plate demand is strengthening. The transportation market is particularly strong, prompting the first Midwest service center source to cite it as a bellwether for overall U.S. economic improvement. "Overall plate demand has been good. Construction is not good, but it's no worse than it has been. Transportation is red hot, and I think that says something about where the economy is going," he said. "It's not just demand for truck trailers. That's part of it. But if there is demand for more truck trailers, there must be demand for things to carry on those trucks, right? I think that's a bellwether for the economy and a sign that things are going to be significantly better than a lot of people seem to think. I've seen most economists predicting GDP growth of 3 percent in 2011. I think it could easily be 4 (percent)," he added.
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