Steel Products

Editorial: New Price Increase Announcements Takes Market Back to January 21st Base Price Levels

Written by John Packard

Written by: John Packard

I have been involved in the flat rolled steel industry since 1977. I cannot recall another time during those 36 years in the business when the domestic steel mills have announced two significant price increases within six weeks of one another – with the target minimum base price being exactly the same.

On January 21, 2013 AK Steel announced a $40 per ton price increase. Other mills quickly began raising prices – only by $50 per ton. ArcelorMittal in a bit of a twist came out with an internal memo which was leaked to the industry which stated, “The market manipulation and discounting of the CRU has had a dampening effect on industry spot prices. As a result, effective immediately, our minimum base price on all new hot rolled orders will be $605 plus $45, or $650/ton. Our cold roll price will be $705 plus $45, or $750 per ton, and spot HDG will be $715 plus $45, or $760 per ton. This pricing is in effect until February 6, 2013.”

We now fast forward to February 28, 2013 and take a look at the events of the past few days. U.S. Steel came out with a $50 per ton price announcement which was followed by AK Steel and Nucor in writing. NLMK USA advised their customers verbally they were following the $50 per ton number and then ArcelorMittal put some parameters around what the new numbers meant when they verbally told their customers the target minimum on hot rolled was $650 and on cold rolled and coated $760 per ton.

Severstal then followed earlier today with specific base prices of $32.50/cwt ($650) on hot rolled, $38.00/cwt ($760) on cold rolled and $38.00/cwt ($760) on hot-dipped galvanized.

The price announcements which have been made this week are basically returning the industry to the suggested minimum price levels provided to the industry during the week of January 21, 2013.

SMU has had a policy of keeping our Price Momentum Indicator at Neutral (where it has been for the past 13 weeks but…) when the domestic mills make a price announcement. We will continue to hold our Neutral rating through the remainder of this week.

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