NEW YORK Gerdau Long Steel North Americas leading move to raise rebar prices may not result in higher transaction prices but it could help keep them from falling further in the wake of waning scrap tags, buyer and mill sources told AMM
A Gerdau spokesman declined to comment on the motives behind the hike, but market sources speculated the company's announcement was largely intended as a pre-emptive move to put a floor under rebar prices before lower scrap tags trickle through.
Rebars just too cheap (and) nobodys happy with it, one rebar mill source said. (Gerdaus) trying to shore up the numbers so they dont go any further down.
Gerdau announced late April 5 that it was increasing its transactional prices on rebar by $10 per ton (50 cents per hundredweight) effective with new orders April 15 (amm.com, April 5
). The move came just one day after AMM lowered its consumer buying price for shredded automotive scrap in the Chicago marketa major component of some mills raw material surchargesby $22 per ton (amm.com, April 4
Rebar prices usually move in the same direction as scrap prices, leading some to speculate Gerdaus move is an attempt to stop last months largely successful price increases from slipping alongside scrap (amm.com, March 13
In late March, rebar prices rose to $690 per ton ($34.50 per cwt) f.o.b. mill, up slightly from first-quarter lows of around $670 per ton ($33.50 per cwt) but well below prices near $760 per ton ($38 per cwt) logged at this time last year.
From a standpoint of getting them back into something that is somewhat profitable, they need to raise the price. ... The momentum (in the market has) been downward. (Gerdaus) throwing the increase out there if nothing more than to slow the momentum down, a rebar fabricator said. You have to slow the ship and get it moving in the other direction.
Gerdaus move also surprised some market participants because it came before an announcement from Nucor Corp., often viewed as the price leader.
How out of character is that? a second rebar fabricator said of the switch. Its bizarre.
Gerdau was scared as hell Nucor was going to lower the transaction price based on scrap, added a rebar distributor. I was happy when I saw (the letter). All that meant to me was, thank God prices arent dropping.
Nucor Corp. will likely announce its price changes, if any, sometime this week, sources said, with some predicting other mills are likely to take a cue from Gerdau and hold on to their current prices as well. Nucor could not be reached for comment.