US plate prices up 5%, buyers scrambling amid 232-driven supply concerns

Plate prices in the United States are at their highest point in more than three years and heading higher, while plate mills seek to keep a healthy premium over fast-moving hot-rolled coil prices amid a Section 232-fueled scramble for steel.

American Metal Market’s latest price assessment for cut-to-length plate stands at $42 per hundredweight ($840 per ton), up 5% from $40 per cwt ($800 per ton) previously and up 21.7% from $34.50 per cwt ($690 per ton) a year ago.

Plate prices were last at $42 per cwt in mid-October 2014, according to American Metal Market pricing records.

Lead times are approximately eight to nine weeks at mills that have spot tons available - and some don’t have spot availability, sources said.

“The lead times are exceeding our inventory levels. I just want to make sure I get the orders in. I think all of the other service centers are doing the same thing,” one East Coast distributor said.

Hot and getting hotter

“It’s crazy to say the least. This 232 has shaken the whole system,” one mill source said. “It’s difficult to figure out the [long-term] pros and cons. But right now the market is pretty hot - the hottest I’ve seen in years.”

Mills were already busy with energy-related projects even before the US Commerce Department unveiled unexpectedly aggressive recommendations for its 232 investigation into steel imports, sources noted. And those mills that hadn’t been busy with project work soon filled up with spot orders.

“People are starting to say ‘allocation’ or at least ‘controlled order entry,’” one West Coast distributor said. And so customers are starting to hoard to make sure they have enough material to fulfill downstream contracts. “We’re in a mad dash… People who have jobs are just coming in like crazy,” he said.

The potential for rapidly rising prices and supply shortages, while good for mills in the short term, might come back to haunt them in the long term, some cautioned.

“There will be retaliation” if the 232 is implemented, a second mill source said. The question is whether that retaliation comes in the form of a challenge at the World Trade Organization, a US or other trade court - or in the form of tariffs on US exports of other goods, such as agricultural products.

Imports down

Customers in the US Northwest, for example, who had previously relied on imports from Asia, are now buying from mills as far away as the Gulf Coast to meet their needs, sources said. That means paying not only the high prices for steel but also as much as $6 per cwt ($120 per ton) in freight costs.

US import data also shows that US customers are sourcing more steel from domestic mills. The US is licensed to import only 32,587 tonnes of cut-to-length plate for February, according to Commerce figures last updated on Tuesday February 27.

Data for the month is not complete, but if that figure holds, it would represent a 25.2% decline from 43,594 tonnes in January and an 18.9% drop from 40,186 tonnes in February 2017.

“The administration has to be aware that just the existence of [the] 232 has been a boon to the industry for about a year now,” a Midwest service center source said. “Having that thing string out… is nothing but a benefit to the industry.”

President Donald Trump has until April 11 to decide what action - if any - to take to slow imports, which Commerce concluded are a threat to national security. Commerce Secretary Wilbur Ross has recommended blanket 24% tariffs, blanket 63% quotas, or a mix of both featuring tariffs as high as 53% aimed at a dozen exporters.

Supplies, HRC spread tight

Domestic supplies might also be tight because Steckel mills capable of making both sheet and plate are opting to make only sheet because it is more profitable to roll than plate at current prices, the first mill source said. The upshot: Plate mills may have to announce more price hikes, even though they just increased prices by $2.50 per cwt ($50 per ton) two weeks ago.

“The plate guys want to keep that gap between plate and hot-rolled coil,” a second West Coast distributor source said. And at least one domestic mill has closed its order books for April, and is assessing what to do in May and not yet quoting new prices.

Plate mills want to maintain a premium of at least $2.50 per cwt between cut-to-length material and coil, the second mill source said.

American Metal Market’s hot-rolled coil index stands at $38.65 per cwt ($773 per ton). But sources reported paying as much as $40-41 per cwt ($800-820 per ton) for steel this week - implying that the spread between sheet and plate may have narrowed to as little as $1 per cwt ($20 per ton).

Dom Yanchunas, New York, contributed to this article.

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