CHICAGO At least three major steel mills have dropped their prices on long products, with other domestic mills expected to follow suit.
Charlotte, N.C.-based steelmaker Nucor Corp. cut concrete reinforcing bar tags by $25 per ton ($1.25 per hundredweight) and merchant bar and structural products by $40 per ton ($2 per cwt) effective with shipments Thursday, according to customer letters dated Wednesday.
Nucor reduced its raw materials surcharge by $47 per ton while raising published list prices for rebar by $22 per ton and merchant bar and structural products by $7 per ton, according to its customer letters. The steelmakers raw materials surcharge is based on AMMs consumer buying price for automotive shredded scrap in the Chicago market, which fell $47 per ton for October.
Fort Wayne, Ind.-based Steel Dynamics Inc.s Roanoke, Va., bar division also announced a $25-per-ton decrease in rebar prices and a $40-per-ton drop in all other long products tags.
Gerdau Long Steel North America, Tampa, Fla., also said it had cut its rebar price by $25 per ton, effective Thursday, noting that the move did not include coiled rebar products.
Market participants generally said they were not surprised by the decline, given the recent tumble in scrap prices. But some grumbled that they wanted to see more of the scrap fall reflected in the rebar price, with several saying they had expected a decrease of $30 per ton ($1.50 per cwt).
Buyers generally agreed that the decrease put prices for Grade 60, No. 6 rebar in a range of $640 to $650 per ton ($32 to $32.50 per cwt). For merchant products, some buyer sources said mills had continued to stick to published list prices after adjusting them in July (amm.com, July 18), but others said sizable discounts were still available for certain items.
Lead times were reported to be short, with prompt deliveries available from mill floors for buyers willing to shop around, although some complained that truck availability and freight costs have become almost as big a headache as volatile scrap tags.
Several market sources said scrap and steel tags might be near a bottom, and prices and demand could begin to improve after the U.S. presidential election. Others questioned whether the election would have much impact on steel consumption, noting that while anti-business policies might hurt demand, even pro-business policies can only do so much to boost it.
"You dont make long-term decisions unless you are certain about things, so I think some projects are on hold until after the election," said a source at one distributor, echoing the sentiment of other steel buyers. But he cautioned that any real boost in steel tags would come from demand in the market, not the person occupying the White House.
Other sources speculated that prices could rise toward the end of the year in anticipation of a first-quarter increase in construction activity as projects that were put on hold this year might finally get off the ground. But others said they saw no significant driver of increased demand in 2013, questioning how price increases could be justified by the expectation of future demandespecially after similar projections at this time last year largely failed to materialize.
Some steel buyers grumbled about raw material surcharge mechanisms that have fluctuated wildly even as demand remains flat, a trend they claimed has added to the inevitable price volatility arising from scrap and currency exchange swings.
A second distributor source said the surcharge mechanism might have made sense in 2004, when scrap prices were constantly rising. But he questioned whether the method served a useful purpose in a market characterized by lackluster demand and low mill capacity utilization.
"I know the mills are going to do what they are going to do. ... I just wish they would base their prices on demand," he said.
Almost all market sources said any change to the surcharge mechanism was unlikely anytime soon, but some noted that the topic was increasingly becoming part of discussions among steel buyers.