Carbon, alloy and stainless plate are large, flat pieces of steel. The bellwether product for these heavier steels is carbon steel plate, which has been so low in price and so easy to find that many manufacturing companies have been sourcing from mills or processing distributors with little thought to supply or cost-avoidance strategies.

Suppliers and buyers agree that carbon steel plate transacts at spot-market price of about 14¢/lb, making the cost of a standard 3-inch plate a reasonable $435. Based on interviews with buyers and suppliers, mill attempts to get that sales price base up to 17¢/lb will take months to achieve. Capital spending plans are crucial to plate—and structurals—and no less an authority on investment trends than Federal Reserve Chairman Alan Greenspan said in mid-May: "The short-term outlook for capital investment is rather mixed, but the longer term outlook is increasingly, persuasively good."

There are so many markets that use basic "mild steel" plate in coil or cut-length form, that in the end, buyers say they don't really care who made the plate as long as it meets specifications and is easy to inspect. And, with certain end-use markets faltering and service centers trying to cut back on their inventories at a time when there is clearly overcapacity, commodity plates have declined, according to Gary Childs, vice president of sales and marketing for Oregon Steel Mills Inc. in Portland, Ore.

He admits that steel buyers have been able to cap prices for heavier steels, which include structurals as well as plates. Market prices for carbon, alloy and stainless plate fell 14% last year, crushed under the weight of extreme oversupply. Spot prices for beams and structurals rose 2.5% because of some midyear supplier shutdowns. This year's price for a market basket of carbon, alloy and stainless steel plates and carbon and alloy steel structurals rose just 1% through April. New-order bookings for plate mill and structural mill products improved seasonally in January and February but dropped off again in March and April.

While hot-rolled steel plate can be produced to customer orders, most of this flat-rolled steel product is manufactured in standard sizes, and inventories are maintained at the service center link of the supply chain. Service centers supply 35% of the market, the mills supply 50% and traders and offshore mills supply the remaining 15%. By comparison, stainless plate supply is about half service centers and half domestic and foreign mills.

Some recent improvements in demand may not be sustainable, caution some of these suppliers interviewed at a recent industry meeting. While the overall manufacturing economy is improving this year, they say the major markets for heavier steels—construction, capital equipment and heavy machinery—have been just plodding along so far in 2002. "Plate demand is extremely soft," agrees economist John Anton at DRI-WEFA Inc. in Washington, D.C. "Durables manufacturing and nonresidential construction will accelerate in the second half, but increases are likely to be subdued."

Prices have been weak because use of steel plate dropped 13% last year to 8.4 million tons, the lowest amount since 1993, while consumption of heavy beams and light structurals dropped 20% to 7.2 million tons. Economist Anton says "booming investment last decade satisfied much of business and industry's needs for plant and equipment." Looking ahead, he suggests: "Activity in infrastructure and machinery will grow at a much slower pace this decade—and will depress demand growth for plates and structurals."

Dozens of major construction projects sustained demand for plate and structural steel last decade, but annual demand peaked at 21 million tons in 1998. Since then, construction has slowed on stadiums, convention centers, hospitals, distribution centers, high-rise hotels, office and residential towers, and airport and harbor expansions. Atop that, capital equipment manufacture has been slowing. That's why use dropped to 15.6 million tons last year.

There are steel plates for structural applications, the grades bought by construction companies for use in bridges, buildings and freeway overpasses. There are plates designed for boiler and pressure vessel applications. And there are plates designed to meet a specific chemical composition rather than designated mechanical properties. And industry insiders such as Joe Corvin, chief executive officers of Oregon Steel, say that demand during the first quarter continued to reflect the slow-growth manufacturing economy and a significant inventory build up of end-user and service center inventories in anticipation of the Section 201 tariffs that were imposed in March.

Hot-rolled steel plates are produced as (a) discrete plate from a plate mill or (b) coiled plate from the hot-strip mill. Discrete plate is a cut plate that can be as much as 6-inch thick, as much as 130-inch wide, and from the usual 8-feet to as much as 60-feet long. Coiled plate can be as much as 2-inch thick, and as much as 77-inch wide. These plates are used by fabricators of machine parts, gears and sprockets, and by manufacturers of such products as rail cars, ships and barges, refinery and storage tanks, large boilers and pressure vessels, heavy machinery, heavy trucks and trailers, farm and off-road equipment, furniture and recreational equipment, and mining equipment—among numerous other end uses.

Stainless steel plates are used to make chemical processing, transport and storage, pollution control, food preparation and cooking, petroleum refining, synthetic rubber manufacturing and industrial heating equipment. Plates also are rolled up and welded to form the large steel pipes used for oil and gas pipelines.

Structural steel products generally fall into two categories—beams and light structurals. Wide-flange beams are used in a variety of commercial, industrial and residential construction applications, plus such infrastructure projects as roads and bridges and such public sector construction as schools and hospitals. The somewhat lighter structurals are used in construction but also in manufacturing and as the raw materials for heavy tubulars.

Demand trends for plate and structurals remain unclear, but market analysts say springtime construction spending and manufacturing activity expanded less than expected, which signals a sluggish economic recovery. "I don't see a heck of a lot of economic growth out there,'' says equity analyst Kathy Cole Dodd at Bank One Investment Advisors in Columbus, Ohio. That's not good news for suppliers of heavier steels.

This fits with the outlook of analysts such as Christopher Plummer at Metal Strategies Inc., West Chester, Pa., who forecasts that production of freight cars, heavy trucks, construction equipment, farm machinery likely will continue to be weak in 2002—and that industrial equipment won't do well until heavy manufacturing shows sustained profitability again.

David Sutherland, chief executive of plate producer Ipsco Inc. in Lisle, Ill., says there has been "considerable ordering strength from the service center sector," but he admits "it isn't clear if order patterns reflect temporary inventory corrections or a sustainable economic improvement." That's because corporate marketing executives "still see weak demand from the producers of heavy trucks, truck trailers, rail cars and construction equipment." And, according to several service center executives, bookings for plate to be delivered to producers of power transmission equipment, machine tools and heavy machinery have been pushed back to November.