Steel mill rebate offers get mixed reactions

Dec 17, 2013 | 11:37 AM | Corinna Petry

Tags  hot-rolled steel, cold-rolled steel, coated coils, mill rebate, Corinna Petry

CHICAGO — Although buyers of hot-rolled, cold-rolled and coated steel coils say the "index-minus" supply contracts hurt the market, many now express confusion over what’s replacing them: mill rebate programs.

One objection raised was about the tone.

"The mills are telling you what to do and you can shut up about it," one flat-rolled distributor source said.

Others questioned the timing of the rebates, and wondered how they could accurately price steel without knowing exactly what they would get on the back end. On the front end, most buyers told AMM they’re being told they must pay the full published price.

"There is trepidation and fear (about) the way the rebates are organized, not knowing what you’ll get back until the quarter is over because of the delivered volume, and what spot price the rebates will be based on," a lower Midwest distributor source said. "The purchasing staff will get it," but the sales department "won’t know the margin to sell off. The rebate becomes the profit if you price it right. Otherwise, you could be in big trouble."....





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