Steel prices fall before scrap in ‘curious’ move

May 03, 2013 | 05:09 PM | Samuel Frizell

Tags  Raw material surcharge, Nucor Corp., Gerdau Long Steel North America, rebar, merchant bar, steel beams, Samuel Frizell

NEW YORK — Some domestic steel mills may be considering moving away from using scrap-based raw material surcharges as a component in their finished steel pricing as recent volatility in scrap prices erodes suppliers’ pricing power, sources familiar with the situation said.

No mills have officially announced an intention to stop using raw material surcharges in their net long steel transaction prices, but according to a number of market players, some steelmakers have been having preliminary internal discussions about whether it’s time to re-evaluate their pricing structures in light of significant scrap fluctuations in recent months.

Traditionally, many steel mills announce changes to their net transaction prices—often comprising a base price and a raw material surcharge—in the days following the release of AMM’s monthly consumer buying prices for a number of scrap grades in the Chicago market, used as the basis for some mills’ surcharges.....

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