NEW YORK The U.S. rebar market is divided on whether Gerdau Long Steel North Americas $30-per-ton ($1.50-per-hundredweight) transaction price increase will stick.
The Tampa, Fla.-based company raised its prices for rebar and merchant bar products effective with new orders Jan. 14 (amm.com, Jan. 13); all orders confirmed by the close of business Jan. 13 will be price protected if shipped before Feb. 1.
Some market participants said Gerdaus price hike will stick due to the recent increase in AMMs Chicago consumer buying price for shredded automotive scrap, the raw material input for rebar, which increased to $438 per ton in January from $415 the previous month.
"I think Nucor (Corp.) will go for the full $30-per-ton hike and they will get it because they can," a source at a rebar fabricator in the Midwest said. "Scrap prices are up $23 per ton, so it can justify the price increase."
A rebar producer source said he was confident that Gerdau would be successful in passing on higher domestic scrap prices to customers despite sluggish demand from the construction sector.
"I hope that Gerdaus $30-per-ton increase will hold. Scrap prices have increased and margins are squeezed in this marketplace. Just look at the rebar mills balance sheets for the third quarterits not looking good. The fourth-quarter earnings will be out in a few weeks and Im expecting the same," he said. "The only way the price hike will be successful is if the larger mills (Charlotte, N.C.-based Nucor, Irving, Texas-based Commercial Metals Co. and Chicago-based ArcelorMittal USA LLC) announce price increases."
Several other rebar market sources said it was unlikely that Gerdau would get the full $30 increase, adding the company was more likely to achieve $20 per ton due to steady market conditions in the rebar market.
"The $30-per-ton price hike is ambitious," a West Coast distributor said. "I think that Nucor will increase its prices later this week and it will probably be $20-per-ton higher. They will be successful in getting it, but not much more than that because there is not enough demand."
Sources said rebar business activity has been slow due to frigid weather across much of the United States.
Gerdau said in a letter to customers that its increase on merchant bar products affects the transaction prices for most angles, channels, flats, rounds and squares.
Gerdaus latest price move followed a $10-per-ton (50-cent-per-cwt) increase on rebar and merchant bar products by the company on Dec. 23 (amm.com, Dec. 23).