Steel Products Prices North America

Flat Rolled Mills Take Prices Up Another $30

Written by John Packard

On the heels of its $50 per ton increase on carbon plate prices on Wednesday, Nucor announced an additional $30 per ton increase on hot rolled, cold rolled and galvanized steel products on Friday, effective immediately.

U.S. Steel, NLMK USA and California Steel matched the Nucor sheet price increase of $30 per ton. ArcelorMittal USA, on the other hand, put specific base price levels into the market for all to digest. The new AMUSA spot transaction base price minimums were referenced in various emails to their customers at $680 per ton on hot rolled ($34.00/cwt) and $860 per ton on cold rolled and coated steels ($43.00/cwt). The AMUSA base price levels are before any extras are added.

Nucor’s latest move marks the ninth price change it has announced this year, one in every month except April, May and September. All total, the mill has raised its hot roll price by $285 and cold roll and coated by $275 per ton.

Of course, the nation’s largest steel producer has not collected the sum total of its increases, which are subject to many market factors. Rather, like other mills, it has repeatedly attempted to raise the price by just $30 or so, with limited success. At the time of its first price hike in January 2017, the average market price for hot roll was around $620 per ton. The current price is about $615 per ton, according to Steel Market Update data. The peak hot roll price in 2017 was about $655 in March, based on SMU’s index average for HRC.

Demand remains strong heading into the first quarter and scrap prices have jumped by $20 to $40 per gross ton in recent weeks, signaling that Nucor and the other mills have a good chance to collect at least some of the latest increases.

Steel buyers contacted by SMU offered a number of comments on Nucor’s price hike and its likelihood of acceptance by the marketplace:

  • “There is some momentum happening now. I see this hike sticking and expect another when January scrap settles.”
  • “Scrap is up and going higher. No imports are coming in. Demand is MUCH better than anticipated. Not only will these stick, but it’s going higher. Would not even be surprised if there were steel shortages in the first quarter.”
  • “Yes, Nucor will collect at least part short-term and all in time. The mills’ ability to take prices higher is all about supply, supply, supply. One of the biggest factors is imports. We need lower supply to move the market higher from a combination of higher demand pull, stable/lower domestic production and lower imports. Given the recent decision on circumvention, and perhaps additional restrictions from future cases, the likelihood we will see a future spike in imports seems remote in the near term. That is a very bullish development for the U.S. mills.”
  • “Service centers are beginning to firm up. This usually indicates that the mill increases will have strength. Will Nucor collect all the increases? I’m not sure, but I am sure customers will be paying a higher price than before. I would estimate prices have some room to run based on prices we have seen in the recent past, which were higher than the current price. They also have circumvention, zinc and scrap as arguments to lean on.”
  • “The mills should be able to collect most or all the increases. Pricing has been relatively low, and the increase in scrap pricing is going to finally give the mills a reason to get pricing up. The question, as always, is up from what? That is yet to be seen. There should be some normalizing of pricing over the next few weeks as the mills are finally able to put this year behind them and move into January. We are generally optimistic about Q1 demand and that pricing will be higher than Q4 in all carbon flat products. However, the mills will be unlikely to continue to push pricing up without an additional ‘event,’ whether trade or policy related (or some natural or global disaster).”
  • “Yes, I think Nucor will collect this increase along with the previous ones. The way things are feeling right now, I don’t think this is the end, either. Too many factors could keep this going until HR is north of $700 per ton in the first half. It should be a really interesting next six months. Thank goodness I am not a buyer right now.” 
  • “We’re well positioned with inventory from end-of-year deals and have all of our contract customers protected. We’ll pay the new prices if we can quote them to customers, with a healthy margin, and they need steel. I think the market has legs through at least the first half. Between zinc increases, paint increases, base price increases, and service centers looking for margin improvement, I think any customer that hasn’t locked down should prepare for some sticker shock.”
  • “I think the prices will stick. We are very busy for this time of year, with no signs of letting off. Even government contracts are booming, especially from the state level. We are a buyer and will continue to try to increase inventory due to high demand. We even renegotiated 2018 contracts for higher tonnage. I am having no problems passing on price increases to my customers. I am very bullish on first- and second-quarter 2018. All signs from my customer base show increased demand, especially for hot roll. There are just no imports inbound in any volume.”
  • “Mills are pretty bullish. Hot rolled is red hot. Cold rolled and coated are more dependent on contract participation, such as automotive. Most believe costs will continue to climb and another increase in 30 days or so is likely. Looks like capital spending could spur additional steel consumption next year. Lower foreign participation could even create a shortage scenario.”

Not everyone is convinced rising prices are inevitable, however. Commented one buyer: “I am very confused on the past and current price increase announcements. The mills have failed to collect the past two and now another one? I believe they will collect $40 of the announced $100 per ton, but that will take time, as many distributors are not that busy and have slowed purchases. Of course, the mills may cave before they collect, if buyers hold off on their buying. 

We are sitting on the sidelines right now. The mills are moving a bit too quick for me. Is the current increase based on the recent Department of Commerce recent announcements? And what happens if the Section 232 announcements further negate imports? Do they raise prices again? Is anyone paying attention to the manufacturers being injured by these rulings in the United States? The biggest issue for distributors is our inability to increase pricing. We are only as good as our weakest competitor and there is always someone who needs an order. As to the first quarter, I believe prices will remain flat on cold roll, and coated products will increase slowly. I believe business levels will remain flat, too.”

Commenting to SMU on Friday, one steel mill executive said spot prices “are definitely up,” but he added, “you know how Day 1 of a price increase is.” Steel buyers were actively negotiating with their mills with the hope of ending up “somewhere in the middle” of the prices previously quoted and the new price levels. “So yes, we have increases, but not quite at full value,” said the exec.

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