Severstal North America Inc. has introduced new firm pricing
options for quarterly and six-month spot buying of sheet
Mich.-based steelmaker said in a June 14 letter to customers it
was instituting a firm pricing option extra of $1 per
hundredweight for quarterly buying and $2 per cwt for six-month
buying. The quarterly and six-month options dont include
"These options reflect
producer price risk and are valid only when the current
published base prices are used," Thomas M. Marchak,
Severstals vice president of commercial, said in the
letter. "Severstal is also reviewing various other pricing
options, including raw material based or indexed to the change
in published price indices."
declined to comment, customers of the Russian subsidiary
indicated that the options are a move by the company to
separate contract and spot purchasing, which buyers said have
become muddled in recent years due to contract discounting.
clear to me is that theres a total distrust by the spot
buyer because larger spot buyers have received the same
benefits as contract buyers," one southern service center
source said. "The mills have taken the bigger players in the
spot market and given them contract deals. Its become an
uneven playing field."
The pricing move is
more likely to affect customers of Severstals Columbus,
Miss., operations rather than its Dearborn facility, which
traditionally is tied to long-term contracts with automotive
Others were more
skeptical, however, saying that Severstals spot pricing
options likely wouldnt be replicated by others, making it
difficult to become sustainable industry wide, due to specific
market fundamentals. While the recent price hikes by domestic
mills seemed to have gained some traction, some maintained that
the higher transaction prices are likely temporary due to
inventory restocking, summer outages and labor negotiations,
which would be resolved closer to the end of the summer.
interesting, but I dont know if it really matters," one
Midwest service center source said. "Business is going to
dictate what happens in the marketplacesupply and demand.
For me, Im not too concerned."
steelmaker followed the lead of other major domestic steel
mills by increasing its minimum base prices for sheet products
to $31.50 per cwt ($630 per ton) for hot-rolled coil and to
$36.50 per cwt ($730 per ton) for cold-rolled and hot-dipped
galvanized, effective immediately, up by $1 per cwt ($20 per
ton) from prices set May 23 (
amm.com, May 23).
ArcelorMittal USA LLC,
Chicago, announced June 13 new minimum base prices of $630 per
ton for hot-rolled coil and $730 per ton for cold-rolled and
galvanized product (
amm.com, June 13), and Pittsburgh-based U.S. Steel
Corp. and Charlotte, N.C.-based Nucor Corp. reportedly made a
similar move (
amm.com, June 14).