Steel Products Prices North America

NLMK USA & AK Steel Raise Flat Rolled Steel Prices

Written by John Packard

Two domestic mills made price moves on Wednesday as NLMK USA and then AK Steel came out with price increases on flat rolled steel. The NLMK announcement did not reference specific base price levels while the AK Steel announcement did.

NLMK USA was the first to announce, which they did in an letter to their customers dated December 9, 2015. NLMK USA announced flat rolled steel spot prices out of their mills will increase by $40 per ton.

The NLMK letter, signed by James Banker, Jr., Executive Vice President of Commercial for the mill, told their customers, “In recent weeks we have seen improving market conditions including the stabilization of raw material prices, declining flat rolled inventories, the surge of imports slowing, and continued year over year growth in some of the largest steel consuming market sectors.”

The increase is to be “effective immediately” and does not impact contract orders on spot orders for future delivery.

Mr. Banker told SMU in a response to our questions that their customer comments so far are “supportive” of their move.

He advised us that cold rolled and coated demand is getting stronger and hot rolled is “improving.” “Order placement has picked up and lead times are extending.”

Lead times out of the NLMK USA mills are 4-5 weeks on hot rolled and 6-8 weeks on cold rolled and coated coils.

Initial buyer comments are supportive of the increase although the buyers that do business with NLMK are trying to understand where their base prices should be right now.

One of NLMK’s customers told us after seeing the announcement, “For years now we have seen phony, phony, phony increases in order to get people to come off the sideline. However, we are seeing customers placing orders prior to the announcement so we think this has a chance of sticking.”

The AK Steel announcement was done through a press release put out on Wednesday. The announcement informed their customers that the mill will change “Minimum Base Prices for New Orders” to:

$420 per ton ($21.00/cwt) on hot rolled coil

$540 per ton ($27.00/cwt) on cold rolled coil

$550 per ton ($27.50/cwt) on hot dipped galvanized coil

The new base prices represent a significant jump compared to the spot market averages which SMU reported earlier this week as being:

$360 per ton ($18.00/cwt) on hot rolled. Difference vs. AK Steel announcement equals $60 per ton.

$482.50 per ton ($24.125/cwt) on cold rolled. Difference vs. AK Steel announcement equals $57.50 per ton.

$482.50 per ton ($24.125/cwt) on galvanized. Difference vs. AK Steel announcement equals $67.50 per ton.

However, AK Steel customers advised Steel Market Update that the mill had not been participating in the sub-$400 hot rolled market for some time now. From the perspective of the AK customers the new numbers represent a mild increase over what the mill was quoting for spot business.

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