LOS ANGELES A $20-per-ton increase on structural steel stands a good chance of stickingat least for the time being, and despite a drop in a key scrap pricedue as much to recent delivery disruptions as to any improvement in beam consumption, market sources said this week.
Nucor-Yamato Steel Co., Blytheville, Ark., raised prices for wide-flange, standard and H-pile beam products by $1 per hundredweight ($20 per ton) effective immediately, the company said in a March 7 letter to customers. All confirmed orders as of the close of business March 7 will be price protected if shipped before April 7.
Nucor Corp.s Berkeley, S.C., beam division said it implemented the same increase on beams, while Tampa, Fla.-based Gerdau Long Steel North America announced a $20-per-ton hike in transaction prices for beams and H-piles effective March 10.
The other major beam producer, the Structural and Rail division of Steel Dynamics Inc., Columbia City, Ind., late March 10 also raised its prices by $20 per ton, effective at the close of business March 10. Previous orders are price protected if shipped before April 7.
The hikes bring the published f.o.b. mill price on core sizes of wide-flange beams to $41 per cwt ($820 per ton) from $40 per cwt ($800 per ton) previously.
The increase wasnt universally expected, since discounting in many cases has persisted this year and scrap prices also have weakened. AMM on March 7 reduced the consumer buying price for shredded automotive scrap in the Chicago market by $20 per ton, following a $30-per-ton reduction in the key raw material in February.
In fact, Gerdau notified customers March 7 that its beam prices would remain "unchanged," along with tags on merchant products and reinforcing bar. However, following news of Nucor-Yamatos and Nucor Berkeleys increases, Gerdau did an about-face on beams and joined the increase.
But nagging shipment delays, due in large part to this winters severe weather, could override the influence of discounts and falling scrap prices, "at least for the time being," some buyers believe. By most accounts, SDI has been particularly affected by these shortages, and in many cases its shipments are running two to four weeks behind. An SDI spokeswoman said she couldnt comment.
"Im in their backyard but I can get stuff quicker from Berkeley," said a Midwest distributor who estimated that he is less than 200 miles from Columbia City in contrast to several hundred miles more from Nucors South Carolina mill. A western service center executive said SDI has been absorbing the higher cost of shipping some orders by truck at an estimated two to three times the cost of rail.
Shipments from Nucor-Yamato also have been running late, sources said, while some customers also reported a shortage of flat car availability out of Blytheville. A spokeswoman for Charlotte, N.C.-based Nucor, the operating partner in Nucor-Yamato, couldnt be reached for comment.
While the mills tell customers their backlogs are growing as nonresidential construction picks up, most distributors said their own business has yet to reflect this increase. However, they agree that mill floor stock has been depleted in recent weeks, reducing availability.
Once supply disruptions are resolved and mill floor stock is rebuilt, it remains to be seen whether or not nonresidential construction demand has in fact recovered to the point where it will sustain rising beam prices, most sources agreed.
"They have a window to raise prices, but after that, who knows?" said an eastern distributor about mills longer-term outlook.