Purchasingdata.com reported that wide flange beams may be selling as low as USD 777 per tonne in December 2008, down from an average USD 1,060 in October 2008, now that domestic producers Nucor Yamato Steel, Steel Dynamics and Gerdau Ameristeel have intensified their price-reduction derby. The mills have cut FOB mill list prices by USD 283 per tonne in a series of reductions of USD 120, USD 80 and USD 83, partly because of a lack of sales and partly because of a 44% drop in scrap costs.
The September mill price for A36 W8 wide flange beam was USD 1,159 per tonne with lead times at 7 weeks plus and producers talking about strong demand from the nonresidential construction market, where spending was running almost 14% ahead of the 2007 pace.
Lately, though, the nonresidential construction market has been attacked by credit and financing woes and demand has collapsed for future deliveries of such key raw materials as beams and bars. Nonresidential construction spending fell 8% in September from the year ago value.
Mr Ken Simonson chief economist at Associated General Contractors of America in Arlington said that "Contractors have been reporting that developers put lots of projects on hold because of the credit freeze and weakening demand for stores, offices and other facilities. Meanwhile, states have had to postpone construction bond issues or defer budgeted projects in order to meet balanced budget mandates and companies plan to trim spending on structures in the next 12 months."
Metals analyst Mr Mike Gambardella at Merrill Lynch & Co said that "Steel market conditions remain challenging and suggests that price levels in the fourth quarter are likely not the trough."