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Nucor SBQ hike may offset raw material extra

Keywords: Tags  Special bar quality, SBQ, Nucor, price increase, scrap surcharge, rolling schedule, Corinna Petry

CHICAGO — Despite a base price increase by Nucor Corp., bar pricing likely will stay level next month, according to carbon and alloy engineered bar buyers, who said they likely won’t adjust their order volumes.

The Charlotte, N.C.-based steelmaker said in a Feb. 10 letter to customers that it would raise its transactional base pricing on all carbon and alloy special bar quality (SBQ) rolled bar products by $1.50 per hundredweight ($30 per ton) effective with shipments March 10. Nucor could not be reached for comment.

The base price hike, which sources consider a leading move, may be meant to balance a $30-per-ton decrease in the raw material surcharge that Nucor is expected to implement for March after prices for No. 1 busheling scrap fell this month by roughly the same amount.

"This has to be an offset move to the decline in the scrap price," one Ohio Valley buyer said. "I think (the base price hike) will be accepted. If scrap was up or staying the same, it probably wouldn’t be."

A second buyer in the region agreed. "We won’t change our buying pattern in March, however. We expect a dip in total mill cost over the next couple months," he said, citing mill lead times that "haven’t pushed out in a year" and the expected spring arrival of forged bar imports from China, India and Russia.

A source at a Mid-Atlantic cold drawer said the announcement came as a surprise. "Suppliers are busy but there are holes" in their rolling schedules due to lackluster demand from weaker industries like construction," he said. "You would think (a price increase) would be tied to increased demand."

An East Coast SBQ distributor said he would support higher pricing. "We’ve been working with flat pricing for a very long time, which is not necessarily healthy," he said. Demand, however, "is not surging by any means. We would relish an upturn in demand in manufacturing beyond the standard, modest growth expectations we are all seeing. We’re used to going through cycles, and this has been a non-cycle."

Sources continue to see automotive and energy as demand bright spots. They also confirmed that hot-rolled Grade 1000 series 1-inch rounds continue to fetch about $875 per ton, f.o.b. mill, on the spot market.

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