Metal Bulletin sister publication AMM’s price assessment for cut-to-length plate has fallen to $33 per hundredweight ($660 per ton) from $33.75 per cwt ($675 per ton) previously, and from $34.50 per cwt ($690 per ton) a month ago, according to pricing records.
Plate prices have not fallen below $33 per cwt since they stood at $۳۲.۵۰ per cwt ($650 per ton) in late Januar . The decrease comes in part because lead times average only three to five weeks and so are not far enough out to give mills sufficient pricing power to raise prices, according to market participants and mill lead time reports.
It also comes because scrap prices – a key cost input for mini-mills and an important influence on US market sentiment – are expected to fall this month, perhaps significantly, if export sales are any indication of what is in store for inland markets.
“I think people are more cautious about restocking. And that sense of euphoria we had last year is not there now,” one plate buyer said in reference to hopes of increased infrastructure spending following President Donald Trump’s election last November. Infrastructure spending has taken a back seat to tax reform in Washington, which means there will probably be no progress on the infrastructure front until 2018 at the earliest, the plate buyer sai .
But plate prices could gain support later in the quarter, assuming import volumes continue to fall, according to one US Midwest service centre source. And that trend could become more pronounced should the US dollar weaken further.
That will have an influence, because import prices will be higher compared with the domestic price,” he said. The USA is poised to import at least 38,603 tonnes of cut-to-length plate in September, according to licence data compiled by the US Commerce Department to September 26. That means imports are on pace to fall significantly below the 63,877 tonnes that arrived in August, preliminary US Census data indicate. Higher costs for graphite electrodes could also support prices, market participants said.
US mini-mills, which use electrodes in their electric-arc furnaces (EAFs), could see that portion of their steelmaking costs increase from ۲۵ cents per cwt ($5 per ton) to $1.25-1.50 per cwt ($25-30 per ton), Piyush Sood, vp of equity research at Morgan Stanley, wrote in an October 2 research note. The cost increase could be as much as $3.75 per cwt ($75 per ton) at some mills.
That big increase in electrode costs will be felt at most mills as electrode supply contracts for the first half of 2018 reset in February, Sood wrote. But not all mills have long-term supply agreements, he warned. “We would flag the risk of a production disruption at small independent and private EAF producers.”
Integrated mills are less exposed to the graphite electrode price increase because they use electrodes only in their ladle metallurgy furnaces. As a result, integrated mills consume 70% less graphite electrodes than mini-mills, Sood wrote.
Therefore, it is not clear whether integrated mills would follow a price increase announced by mini-mills based on higher electrode costs, some market participants have said, a sentiment Sood echoed.
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