CHICAGO At least two
major mills have announced plans to boost long products prices
in response to a rebound in domestic scrap tags.
Nucor Corp. said it plans to
increase net prices on reinforcing bar, merchant bar and
structural bar products by $35 per ton ($1.75 per
hundredweight) effective with Dec. 1 shipments.
The Charlotte, N.C.-based
steelmaker said in a letter to customers dated Nov. 9 that the
hike comprises a $52-per-ton ($2.60-per-cwt) increase in the
companys raw material surcharge combined with a decrease
in base prices of $17 per ton (85 cents per cwt).
Tampa, Fla.-based Gerdau Long
Steel North America jumped on board Monday, announcing in
letters to customers a $35-per-ton increase on rebar and most
angles, channels, flats, rounds and squares. Gerdau said its
increases are effectively immediately on all new orders, while
existing orders will be price protected provided they are
shipped prior to Dec. 1, the company said in its Nov. 12
Market players said they were
widely expecting other mills to follow.
The price increase announcements
come after AMMs consumer buying price for
shredded scrap in Chicagoused as the basis for some
mills surchargesrose to $387 per ton, a $52-per-ton
gain from Octobers levels (
amm.com, Nov. 7).
Several market sources
questioned why domestic mills announced an increase of less
than the full $52-per-ton scrap price rise, with some citing
poor demand and others pointing to import competition,
especially on merchant products in the southern United States.
But others noted that mills hadnt moved finished steel
prices in lockstep with scrap when pricing for the raw material
fell in recent months either.
Some market players said product
demand has picked up in the days since the increase was
announced as buyers looked to get orders in ahead of the
"Ive been busy. Ive
got a million quotes to do," one rebar distributor said, noting
that some sizes were already in short supply, and thus the
increase was essentially in effect immediately for those
But other market sources were
less optimistic on demand prospects. "Demand is not great. I
dont know that anyone would want to go long. There is
just too much uncertainty," a second rebar buyer said. "I
understand that the mills have to deal with the change in their
costs. ... But the first half of next year is shot."
He predicted that demand would
remain sluggish as the market tries to digest the impact of the
recent U.S. elections on the marketplace, something he and
other sources predicted could take as long as six to eight
Market participants also pointed
to increasing volatility of scrap tags and finished steel
prices, noting that it has become hard in some cases to
convince downstream buyers that prices are truly as volatile as
they have been in recent months despite an essentially
"The difficulty is the constant
fluctuation," the second buyer said. "A $20-per-ton move used
to be huge. Now $40 to $60 per ton gets thrown out like a glass
Some buyer sources argued that
if scrap prices continue to rise without a marked improvement
in demand, a short-lived pricing bubble could develop.
But a mill source said his company had little choice but to
raise prices. "We cant sell at a loss. If scrap goes up,
youve got to cover it," he said.