Steel Mills

Nucor seeks to tame volatility with weekly HR spot price: execs

Written by Ethan Bernard

Nucor executives said the company’s recently introduced hot-rolled (HR) coil consumer spot price (CSP) was intended to address market volatility.

“We’re always looking for better ways to serve our customers, which has led us to introduce weekly pricing updates for our hot-rolled coil sheet products,” Leon Topalian, Nucor chair, president, and CEO, said in a Q1’24 earnings conference call on Tuesday.

The weekly CSP was announced earlier this month, with the most recent price posted on Monday. Nucor also told customers that it would maintain lead times of three to five weeks.

Topalian said that price, coupled with shorter lead times, would “help our customers reduce the risks inherent in price speculation.”

“While the CSP pricing framework has only been in place for a few weeks, the customer feedback thus far has been positive,” he said.

Topalian shrugged off the notion that the CSP would compete with price indices. He said customers had asked for a published price following a recent “whipsaw” in HR coil prices.

In short, Nucor is seeking “to try to shrink that volatility to create more stabilization in the marketplace … and get out of the price speculation that we see all too often in the hot band market,” he said.

Leading up to introducing price

Regarding Nucor’s reasoning behind introducing the price, Rex Query, EVP of sheet products and talent resources, said Nucor looked at price cycles over the last several years, and found a “very predictable” pattern.

“As pricing started to firm, we would see customers enter into speculative buying. They would pull ahead demand. Lead times would then extend,” he said.

Later, he said pricing would “go up beyond supply/demand balances, inviting imports in, inventories would balloon, and then we had to work that off,” Query said. “And you could see orders stop and pricing fall dramatically.”

Topalian was also asked if the price could extend to other Nucor offerings. “It’s only been a few weeks,” he said. “We’ll wait and see how this evolves and moves forward.”

He added: “We’ll allow our customers to have the opportunity to decide rather than us starting that.”

Ethan Bernard

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