Plate prices in the US faced growing downward pressure on Thursday as market sources indicated seasonal headwinds, diminishing lead times and lower distributor resale prices hindering mills' pricing power.
As buyers fished for lower numbers, mills were attempting to hold out for the higher prices. Meanwhile, overall spot transactions over the past five to seven business days were heard to be extremely limited. The decline in transactions was attributed to distributor resale prices slipping below mill replacement costs, as well as the typical summer slowdown experienced around the July 4 Independence Day holiday.
A service center source said the US plate market was still not feeling the "bite from trade cases, and it will be awhile." There has been a reduction in available volume for new plate import offers, with new prices "not too attractive" for buyers, he added. However, there is still material arriving from orders placed earlier this year.
Resale prices were down as "people are blending in new foreign [arrivals] with no idea how they are going to replace steel," he said. "Resale [is] below domestic replacement -- very few buyers, but not that much inventory either."
The source said he expected a "continuing series of 'mini-cycles' up and down as mills and service centers play a game of chicken with capacity utilization/low inventories" and there will be "no winners until demand recovers."
Buyers were testing the waters for prices at $620-$640/st and below for A36 commodity grade plate on a delivered basis but transactions remained scarce. A second service center source said he believed prices would come down through July but thought mills would not let them decline below $600/st delivered.
The second service center source and two others noted there was still some July availability for new plate orders.
A third service center source said one mill started booking July plate orders in mid-May and at the end of June was still booking July. He added that following the last $40/st mill price increase his company opted to sit on the sidelines except for presold orders or a contract need. Despite the headwinds, he said mills were still pushing for higher prices. He still anticipates mill quotes of $680/st delivered for a small order, or about $650/st ex-mill. The market is approaching a tipping point, according to a fourth distributor who said mills were still trying to hold prices up. "The house of cards [the mills] built is looking wobbly," he said, adding that a recent small spot buy was transacted at around $640/st delivered.
S&P Global Platts lowered its commodity grade A36 daily Plate assessment to $630-$650/st from $630-$670/st, ex-works southeastern US mill basis.
