THE MEPS NORTH AMERICAN FLAT PRODUCTS AVERAGE PRICE DROPS 4 PERCENT IN OCTOBER

HOT ROLLED COIL

US service centres describe current business levels as "disappointing". Transaction values from domestic mills have started to soften. Although import offers have also declined, they are uncompetitive compared to local material. In Canada, order intake is slowing significantly, so the producers are willing to make short-term pricing arrangements to secure tonnage. Between now and the year end, there is nothing positive on the horizon that would allow them to lift transaction values. However, input costs will continue to be a factor which will possibly result in further attempts to boost figures as soon as conditions permit.

HOT ROLLED PLATE

In the US, although demand from mining and barge work is good and the transmission pipe market is strong, wind tower business and rail cars are struggling. Sales of commodity grade material continue to be hit by poor consumption in the construction industry. After gaining a small rise in September (albeit not the full $US40 per tonne proposed) producers have been forced to concede a $US40 per tonne decrease during recent settlements and further cuts cannot be ruled out. Delivery lead times are running at four weeks.

COLD ROLLED COIL

The US market is oversupplied since end-user demand remains weak, other than for auto sheet, and service centres continue to keep stocks to a minimum. Transaction values have dipped following September’s brief recovery. We can see very few encouraging signals in the Canadian market as the overall economy continues to struggle. A seasonal slowdown in order placement is anticipated with the Christmas holidays approaching. There are few import offers and those that exist are not attractive. Mill transaction prices have dropped by $C80 per tonne. In the distribution sector, competition remains fierce and many companies are taking further steps to reduce stocks.

COATED COIL

The US auto sector in relatively strong. However, sluggish demand from the rest of the market has eroded hot dipped galvanised coil transaction values in recent weeks. Our electro-zinc coated coil figures are unchanged from the September level. In Canada, the slight optimism expressed in September has faded. Delivery lead times for coated material have moved back to around six weeks. Consumption is described as "spotty". Producers were unable to secure their proposed $C40 per ton hike and selling figures are falling again. Buyers are only purchasing what they need. Import prices are in line with domestic ones.

WIRE ROD

US wire rod transaction values are steady. However, market conditions remain poor. The $US25/30 per ton hike, proposed for October 1, does not appear to have been implemented. In Canada, domestic mill activity is relatively dull because the business climate is lacklustre. Nevertheless, selling figures have picked up recently.

MEDIUM SECTIONS AND BEAMS

US sales volumes of wide flange beams are depressed because so few new buildings are being put up and very little inventory replenishment is taking place. However, the small October 1 increase was successfully implemented. Since then, Nucor has said it will not change transaction prices for November deliveries, despite a $US30 per ton fall in scrap surcharges. Canadian mills were busier during September, allowing them to reduce their stocks of standard items. Prices have strengthened but the improvement is not expected to last too long.

REINFORCING BAR

US market leader, Nucor, will keep its November transaction price for rebar unchanged. The company intends to offset a $US30 per ton fall in the scrap surcharge with an increase on basis figures of the same amount. Despite muted demand, buyers accepted a small rise for October deliveries which reflected higher scrap expenditure. Domestic production cuts and a lack of attractive import offers have tightened supply. Canadian buyers are refraining from building up stocks as market conditions fail to revive. Transaction numbers have rallied recently but are likely to fall back as the final quarter progresses, for seasonal reasons.

MERCHANT BAR

The situation for merchant bar in the US is dismal. Distributors and end-users are not building inventories. Current demand is flat. Customers had been notified in September of an upcoming $US20 per ton rise, effective October 1. However, a $US30 per ton decrease in the November raw material surcharge has allowed Nucor to reflect poor market conditions by cutting transaction values by that amount with immediate effect. Canadian sales showed a small recovery during late September. Transaction figures have moved up $C25 per tonne but further advances are unlikely in the near term. Very few imports are available at attractive prices.

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