Steel buyers and mills continue to battle over prices for steel plate and heavy structurals with neither group comfortable as they await static-free market trends. Chaparral Steel, for example, claims that "robust global demand and strong international prices for structural steel products" should allow the Texas-based firm to boost domestic wide-flange beams prices higher than buyers are accepting.

However, nearly three quarters (72%) of the steel buyers at manufacturing companies surveyed in April by the Institute of Supply Management say inventories are too high and they plan to reduce them over the next six months. This is even more bearish than the 63% polled by Purchasing who don’t plan to boost buying.

That’s probably why steel plate prices have not reached the levels sought by mills even though analyst John Anton at Global Insight’s Washington office writes to clients that “plate has the healthiest demand of any major carbon steel category, and there is little chance that the broad-based strength will abate in 2007.”

Market data shows overall plate demand actually is down just 3% this year off the second-strongest end-use year in a decade in 2006. Yet, even though they haven’t been nearly as successful as they had hoped, the mills have kept pushing higher sales prices at buyers in an attempt to offset rising costs of scrap and energy. “Prices will have to rise at some point to offset increased scrap costs,” according to Dan DiMicco, CEO of Charlotte, N.C.-based Nucor.

Mill executives keep talking about strong bookings for wide-flange beams and other heavy steel shapes; DiMicco, for example, said in a recent press release that “end-use demand remains very healthy for long products,” meaning bars and structurals. However, consumption of wide-flange beams hasn’t increased, supply is in excess and midyear inventories are the highest in six years. Price increases have been slower than expected by the mills.

Tricia Brannigan, the sourcing manager at diversified construction materials company Lafarge North America in Westminster, Colo., notes that “the new housing market has slowed and caused a slowdown throughout the construction materials marketplace.” While the construction in the second half is expected to improve, “it’s really a 'wait and see’ approach,” she says. And that may be why more buyers rejected a 7% price increase for structurals in April than accepted.

Annualized data through spring suggests that full-year plate demand will be even with 2006 tonnage because of solid purchasing in a variety of sectors. “Heavy equipment output and sales are robust,” adds Anton. “Cut plate also benefits from a thriving global shipbuilding industry.”

Still, buyers also report that business levels are down substantially in such other plate-using sectors as heavy trucks, heavy-duty on-highway engines, construction machinery and recreational vehicles. Also slowing overall use has been the collapse in residential construction. Plate pricing also has remained erratic because the rest of the marketplace is being pulled and twisted by what materials manager David Demars at machined parts maker North East Precision in St. Johnsbury, Vt., calls an “order slump for fabricated metal parts.”

Even with reduced imports and somewhat higher scrap prices, overall plate demand hasn’t been strong enough to realize all the price hikes announced for April. Import prices of cut-to-length plate have risen strongly in recent months, though, and an overall lack of import pressure has helped the upward movement in domestic prices to $810 in April—the second-highest level in more than two years.

However, the average price slipped in May back to $795 and analyst Anton isn’t convinced the elevated pricing will stick. Also, with new orders for heavy machinery manufacturing starting to slide, domestic coiled plate leadtimes are under eight weeks and recent prices at $730-$740/ton remain almost 5.5% below the $775 average of last summer.

A Global Insight analysis suggests that plate supply could deteriorate in the second quarter. “High prices and tight supply generally bring out more tonnage, but it has failed to materialize so far,” says Anton. “Inventory is likely to be tight well into the third quarter, even if production and imports do pick up. Hopefully the supply response will come quickly enough to stave off disruption to buyers, but at this time we are watching the market somewhat nervously.”

“Supply of most construction-grade steel is thin but adequate,” suggests Anton. Purchasingdata.com surveys show consistent waits of less than two months for heavy structurals since last August. Anton writes to clients that “prices for construction grades are far stronger than for consumer-related steel products (but) heavy structurals’ pricing may finally begin to ease because supply has risen dramatically.” Prices of steel shapes are moving upwards, says buyer Deon Ford at American Premiere Homes, a builder of new homes in four Southwestern states.

But, wide-flange beam prices didn’t increase as much as expected, rising from $709/ton on average in March to $719 in April—and not the $750-$790 expected by some analysts for April and May. Still, while he admits that “the residential construction markets remain under pressure,” analyst Mark Parr at KeyBanc Capital Markets in Cleveland suggests “the weakness should be offset by increasing momentum from nonresidential, industrial and architectural construction.” Chaparral Steel, which hoped to get prices to $770 by midyear, now says it will keep prices flat on wide-flange beams despite a substantial drop in its scrap costs.