NEW YORK Nucor Corp. has announced a net price increase of $25 per ton ($1.25 per hundredweight) on concrete reinforcing bar (rebar) following an uptick in scrap prices last week.
The Charlotte, N.C.-based steelmaker raised its raw materials surcharge on rebar, merchant bar and structural products by $35 per ton ($1.75 per cwt) but lowered its base prices by $10 per ton (50 cents per cwt), resulting in the $25-per-ton net increase in transaction prices effective with April 1 shipments, the steelmaker said in a March 12 letter to customers. Nucors surcharge is based on AMMs consumer buying price for shredded automotive scrap in Chicago, which rose $35 this month (amm.com, March 7).
Gerdau Long Steel North America followed the leading move, announcing in a letter to customers its own net $25-per-ton rebar price increase, and other mills were widely expected to follow suit.
It is the first published increase in net prices since November, when steelmakers announced price hikes effective with Dec. 1 shipments (amm.com, Nov. 12).
Sources in the rebar market said they were confident the price hike would stick ahead of an expected spring thaw in construction.
"If spring ever arrives, business will be a little better," a steel mill source said. "I think honestly that the price increase will fly."
A source at a rebar fabricator agreed, noting that he was starting to see an uptick in orders. "Business is not so bad. It looks like spring might be coming finally. Commodities have been beat to hell so bad. Im glad things are coming back," he said.
"Prices (are) going in the proper direction," a second mill source said.
With demand reportedly on the rise, some market participants questioned the decision to boost published prices by just $25 per ton instead of the full $35 increase in scrap prices, saying steelmakers may have missed a chance to improve margins in a market that may have accepted the full bump.
"I think that $35 (per ton) would have flown," the first mill source said, conceding nonetheless that while demand appears to be on the rise, its not yet back to full speed. "Margins continue to compress ... (and) business continues to be rather spotty. We have not yet seen the anticipated pickup in business that everyone was hoping for."
"It sends a terrible message to the market," a second rebar fabricator source said of the $25rather than $35boost. "Most of the mills are bleeding (and) theyre saying they need to get back to more profitable times. But theyll take a portion of their profit and give it back to us?"
A bearish source at a rebar supplier said he didnt think that demand was strong enough to support even a $25-per-ton increase. "I dont think the strength is there," he said. "(The mills) are banking on the fact that as soon as the weather breaks theyll get their increase, but it depends on how much" business there is in the construction market.