Steel Products Prices North America

Discrete Plate Buyers Nervous; SMU Momentum Changed

January 24, 2019

The plate markets have been acting quite differently than the hot rolled markets for some time. As hot rolled prices have eroded, plate prices have stabilized, with discrete plate trading around $1,000 per ton, delivered to the mill’s customer. We are seeing the dynamics of the plate markets changing, and SMU wants to be careful to explain that we are talking about the service center inventories or “speculative” plate markets, not the contract or specialty plate products, which continue to be have firm prices and extended lead times.

Discrete plate, or the plate generally sold into the spot markets, has seen lead times drop back by as much as three weeks, according to one of the mill sources we spoke with this afternoon. On average, our survey respondents reported plate lead times (all products, includes specialty) as pulling back by more than one week since the beginning of the month of January. Again, specialty product lead times continue to be extended, with the major mills reported to be taking orders for March. On resale plate, one mill did admit they had some February tons left, but would be moving into March on all plate products soon.

steel plate Plate buyers told Steel Market Update today that the market has become “interesting” with at least two mills taking spot prices for March down $20 per ton on resale (service center speculative inventory). We were told by multiple sources that the change in pricing was due to competitive prices (foreign and domestic). It was also pointed out that scrap prices have dropped. The combination of competitive pressures and lower scrap prices has “taken a little bit of the air out of the tire,” according to a mill source.

The plate buyers and steel mills told us demand for plate products continues to be quite strong. All of our plate sources – mill and service center – said that the end-use markets were quite strong: energy, tanks, rail cars, barges and ships were all clicking on all cylinders. The only market showing any signs of weakness is the service center resale market.

“The market is all over the place, but there has not been a price drop,” said one plate buyer. A second buyer identified a specific mill as taking their March plate orders down $20 per ton (as they may have been too high compared to the average $1,000 per ton selling price in the market).

SMU asked if there were going to be any increase announcements made during the month of January as there have been in the past. (One buyer told us he thought there were January price announcements every year going back to 1997). A couple of the plate buyers reported that the mills were relaying information about “discussions” of a possible March price announcement. However, when we spoke with one of the plate mills, we were advised that probably would not happen. The mill told us, “We can sell at fourth-quarter prices and still make money as our costs are down [lower scrap pricing in January].” The mill went on to say, “Plate prices have peaked and will be a little lower in March.”

Steel Market Update is taking our Plate Price Momentum Indicator from Neutral to Lower. Based on the survey results from this week, coupled with comments being made by both steel mills and steel buyers, we expect some mild reductions in spot pricing ($20-$40 per ton, basically giving back the January increase announced in October 2018) on re-sale plate. We do not expect a sharp decline unless we see further reductions in lead times due to some of the specialty markets seeing changes in demand, putting those mills into the spot markets. For those buying specialty plate items our thinking is pricing will remain stable for the time being. SMU will continue to watch the plate markets closely for any signs of change in either direction.