Severstal NA began advising their customers this afternoon (Wednesday) of their intention to raise flat rolled steel prices. The increase, which is approximately $30 per ton based on recent quotes made by the mill (based on our sources) is effective with orders acknowledged for November 28th or beyond.

The mill put out the following letter to their customers under the signature of Thomas Marchak, Vice President of Commercial for Severstal NA.

To Our Customers:

Subject: Current Market Conditions and Pricing

In early April, steel pricing began a decline which has lasted more than seven months, putting unprecedented pressure on margins. During this time, there has been moderate demand growth in most of the markets we serve, while prices in the marketplace have declined more than 25%. It is critical that we fully recover our costs of production, and address the recent margin compression.

Effective with all new non-contract orders acknowledged for shipment 11-28-2011 and later, our minimum prices for hot rolled, cold rolled and coated products will be as follows:

Hot Rolled Bands $33.50 / cwt

Cold Rolled $39.00 / cwt

Hot Dipped Galvanized $39.00 / cwt

These new Base Prices reflect only a modest increase from current transaction prices. Severstal will continue to monitor pricing and market conditions on a regular basis and may elect to modify future pricing at any time.

Our published price book extras will apply and we reserve the right to re-quote offers that are not yet confirmed.

Thank you for your continued support, and thank you for your business.

Steel Market Update will have further comment and analysis of the Severstal price announcement as well as reaction from the steel market in our Thursday evening edition of our newsletter.

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