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Severstal NA sets new base prices, follows move away from CRU discounts

Keywords: Tags  CRU, discounted index price, Severstal, ArcelorMittal, flat-rolled steel, hot-rolled sheet, cold-rolled sheet, hot-dipped galvanized Tom Marchak

NEW YORK — Severstal North America Inc. has set new minimum base prices for its flat-rolled steel products and vowed to halt selling against a discounted CRU index price, according to an April 17 letter to customers.

The company’s new price for hot-rolled coil will be $32 per hundredweight ($640 per ton), while cold-rolled and hot-dipped galvanized sheet will be priced at $37 per cwt ($740 per ton) effective April 22, the Dearborn, Mich.-based steelmaker said.

Severstal also said that it has been reviewing its pricing methods, particularly as they relate to the CRU index price, a move that follows ArcelorMittal USA LLC’s leading announcement earlier this week that it would no longer enter into new agreements based on a discounted CRU (, April 16).

"Over the past few months, Severstal has been reviewing current pricing methods, including their effect on our customers," Tom Marchak, Severstal’s vice president of commercial, said in the letter. "We have found that discounts off a CRU indexed price do not always reflect market conditions."

While the company said its contracts for 2013 will be honored, it will "no longer consider agreements based on a discounted CRU price" going forward.

The steelmaker also will work with customers "to identify pricing mechanisms which best serve our mutual needs," it said.

Other mills are expected to follow the move away from discounting off the CRU, sources said, particularly as those discounts are said to be eroding already thin margins for steelmakers (, April 17).

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