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
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
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.