Negotiations over 2014 steel contracts have remained
"challenging," particularly as a move away from index-based
discounting has made progress slower than normal, Nucor Corp.
president and chief executive officer John Ferriola said Oct.
"I wont speak
for the rest of the industry, but as we talk about CRU and CRU
minus, we at Nucor recognized that the pricing mechanism was
not compensating us for the quality, service and on-time
deliveries that we provided to our customers every day,"
Ferriola said during an earnings conference call. "We thought
it was necessary to change that. As far as how its being
received, its certainly been a little challenging."
N.C.-based steel producer told customers earlier this year that
it would no longer enter into discounted index-based contracts
amm.com, April 18).
However, the move away
from discounting has been somewhat taxing, Ferriola said.
"Today, our contracts are going a little slower than normal.
But we are making progress and our customers seem to be
understanding the need to make a change. We are moving away
from a CRU-minus pricing mechanism or, for that matter, any
index-minus pricing mechanism."
Evraz Inc. North
America announced earlier this week that it will idle its
Claymont, Del., plate mill as a result of subdued market
conditions and competitive imports (
amm.com, Oct. 14), which Ferriola said had
resulted in Nucor seeing "an incremental pickup in inquiries"
for plate under 3 inches.
The normalizing line
at its mill in Hertford County, N.C., which was upgraded
earlier this summer, has been running at full capacity.
While the company
faced a slight setback last month due to a dome collapse at its
direct-reduced iron (DRI) facility in Louisiana, which has
delayed its start-up to the end of the year (
amm.com, Sept. 26), Ferriola said the incident was
not an issue of the technology used, and the company would
continue hot commissioning of the plant.
While the DRI facility
will help Nucor control its raw material inputs, and ultimately
costs, Ferriola said the company has received interest from
"There has been an
awful lot of interest in the market to buy DRI from us on a
merchant basis," he said, adding that building a second DRI
facility was still an option. "Start-up of the Louisiana plant
will be a huge step forward to the implementation of our raw
The company also
expressed interest in taking a larger role in the automotive
sector. Facing the challenge of meeting fuel economy standards,
the company has been conducting ongoing automotive exposed
steel trials for high-strength and ultra-high-strength
While the company saw
third-quarter earnings jump 33.8 percent from the same period
last year (
amm.com, Oct. 17), Ferriola cautioned that the
outlook for the steel market remains difficult, particularly
due to low utilization rates at U.S. mills, high imports and