In a letter to their customers dated November 24, 2009 - Nucor Steel's sheet group informed their customers of their intention to increase transaction pricing on hot rolled, cold rolled and galvanized by $30 per ton ($1.50/cwt) effective with orders promised for the week of January 2, 2010.

Earlier this week, AK Steel began the price increase process with a price announcement of $20 per ton on hot rolled and $30 per ton on cold rolled and galvanized. AK Steel's increase also goes into effect with orders promised for January production/shipment.

At the end of October, AK Steel published new coating extras. Late last week U.S. Steel adjusted their coating extras as well. To date, we have not heard officially from any other mill although Sharon Coatings indicated they would most likely follow the U.S. Steel lead.

The new extras - once implemented - will take the benchmark item for galvanized (.060" G90) from $2.45/cwt to $2.90/cwt. Looking at lighter gauges (thinner steel) the new extra for .019 G90 will increase from $8.45/cwt up to $10.20/cwt.

To get the full impact of the base price increases on galvanized (and Galvalume) steels you will need to add the $1.50/cwt base price transaction increase to the new coating extra. The .060" G90 item will actually increase $1.95/cwt ($35 per ton) while .019" G90 will increase by $3.25/cwt ($65 per ton).

Time will tell if the full increases actually fly. What SMU is already seeing is many construction related companies have hedged in December - or, they have made arrangements with one of the non-announced mills to roll prices in January (or sell at lower pricing in January). This may put many service centers and other distribution companies in a position where they do not have to buy in January.

This is something SMU will be watching very closely and we will include as part of our new market survey which will be conducted beginning Monday, November 30, 2009.

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