Steel beam price reduced for November deliveries
Three major mills react to weak demand, low scrap costs
By Tom Stundza -- Purchasing, 10/29/2008 3:58:00 PM
Steel Dynamics of Fort Wayne, Ind., has cut the sales price for November deliveries of wide-flange beams by $120/ton. In a letter to customers, the steelmaker says it is taking the action “in response to unprecedented market volatility.” Market sources say the two other major U.S. beam producers—Nucor-Yamato Steel in Blytheville, Ark., and Gerdau Ameristeel in Tampa, Fla.—also are offering steel $120/ton cheaper.
Since the market price average for October is $1,060/ton obtained from surveys of buyers by Purchasingdata.com, the price cut will bring the mill price to $940. Beams cost $1,116 at its all-time peak in August but have slipped as demand has dried up in the face of reduced bridge, highway and other nonresidential construction activity.
The American Metal Market newspaper say the Fort Wayne, Ind.-based steelmaker took the lead in reducing prices because the firm is about to bring on new capacity at its Columbia City, Ind., wide-flange beam mill and is concerned about an imminent threat from imports at the same time that domestic mill orders are drying up. Another fact is that key scrap prices used to make beams had dropped $250/gross ton since August.
The economic downturn will be short for structural steel, suggests Dan DiMicco, CEO of Nucor, in an appearance on CNBC’s stock investment television program “Mad Money.” DiMicco admits that “things are terrible right now” in the steel market “and they’re probably going to get worse before they get better.” But, he continues to insist that rebuilding of the country’s infrastructure and energy sector will require major purchases of steel, which he forecasts will be evident by midyear 2009.
Most economists believe his view is overly optimistic, however, since the American Institute of Architects now projects the overall consensus forecast for nonresidential activity has been lowered and the outlook now is that nonresidential construction spending will fall 1.2% this year and continue dropping another 6.7% next year.
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