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Mills continue to shift from surcharge

Keywords: Tags  raw material surcharge, Nucor Corp., Gerdau Long Steel North Ameica, rebar, merchant bar, structural products, Samuel Frizell

NEW YORK — Nucor Corp. has announced for the second straight month its long steel prices without waiting for scrap to settle, joining an apparent industrywide shift away from the raw material surcharge component previously used to help determine pricing.

Charlotte, N.C.-based Nucor said June 5 it is keeping all of its published prices on reinforcing bar, merchant bar and structural products unchanged. The announcement, which followed Gerdau Long Steel North America’s June 3 pricing announcement, came before AMM settled its Chicago consumer buying price for shredded automotive scrap, traditionally used as the basis for Nucor’s raw material surcharge.

"This will serve to be our pricing for the month regardless of any change in the raw material surcharge, which will be announced no later than the third Monday of the month," Nucor said in its letter to customers.

"As always, we will monitor the marketplace and will respond accordingly by making adjustments to our pricing in order to assure you of a competitively priced product," the steelmaker added.

This marks the second month in a row major mills have announced their prices before the monthly scrap trade closes, raising speculation that mills might be looking to distance themselves from the surcharge tool (, June 5).

Domestic mill sources said players in the industry don’t necessarily plan to discontinue the raw material surcharge altogether, but they confirmed they are moving away from using it as a determining factor in their prices.

"We are interested in moving toward a more fair and different system where the price is based on geography and the market the products are entering, not a globally traded commodity that is not freely traded," one mill source said.

Criticism has been levied at the raw material surcharge in recent months by both mills and steel buyers, many of whom have complained that the raw material surcharge obfuscates market forces.

"(The surcharge) doesn’t take advantage of local market conditions," said a source from a second mill. "The business in different parts of the country is so much different from others. In some areas, it’s doing well; in others, we’re still in the winter."

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