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.
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
"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
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.
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).