Steel Products Prices North America
Other Mills to Stick with Index-based Contracts
Written by Tim Triplett
August 27, 2019
U.S. Steel raised industry eyebrows earlier this month when it informed its U.S. sales force that it would no longer use index-based pricing effective with its 2020 contracts. Would other mills climb on the bandwagon? And if so, what might that mean for steel prices?
Based on comments from chief executives of other industry-leading mills, it appears there will be plenty of legroom on the bandwagon. U.S. Steel may find itself alone for the ride.
All four executives on the mill panel earlier today at SMU’s Steel Summit in Atlanta said they would continue to entertain index-based pricing if that’s what customers want.
Basing contracts on a variety of indices is a common way of doing business in the industry. Many prior spot buyers have moved to index-based contracts for the ease of business, if nothing else, said Mark Millett, president and CEO of Steel Dynamics Inc. “We are not following suit [with U.S. Steel].”
“We have a variety of ways to price contracts depending on the customer and their needs. We will continue to work with our customers very closely,” said Ladd Hall, Nucor executive vice president.
John Hritz, president and CEO of JSW USA, added: “We are eager for long-term contracts. I don’t care if they are index-based or not. We will try to put contracts in place so they are as win-win as possible. I don’t know why you would throw any concept out; it doesn’t make sense to me.”
Cesar Jimenez, CEO of Ternium, Mexico, echoed the other panelists’ sentiments.
Explaining its reasoning in the letter to its sales force, U.S. Steel said: “A significant portion of the flat rolled market which now transacts under these price adjustable contracts is being drive by spot market transactions which are only a minute fraction of the total market. This often serves to distort the economics of these volume-based agreements.
“Transaction by transaction discussions and/or monthly negotiations used to be a staple in our business relationships, not to mention quarterly, semi-annual and annual fixed-price agreements, and we are prepared to utilize any of these options while also satisfying the volume needs of our customers over a defined period,” the company said.
Tim Triplett
Read more from Tim TriplettLatest in Steel Products Prices North America
Nucor slows HRC price climb with $5/ton increase
After eight weeks of double-digit price increases on hot-rolled (HR) coil, Nucor slowed the price rise this week with an increase of $5 per short ton.
Domestic CRC prices surge ahead of imports
The price spread between stateside-produced CR and imports reached its widest margin in over a year.
Evraz raises plate prices $160/ton
Evraz North America (NA) has followed Nucor and SSAB with a plate price increase of its own: up $160 per short ton (st). The increase was effective immediately for all new orders of carbon, high-strength low-alloy, and normalized and quenched-and-tempered plate products, as well as for hot-rolled coil, the steelmaker said in a letter to […]
Nucor lifts HR coil to $820/ton
Nucor has increased its consumer spot price (CSP) for hot-rolled (HR) coil for a fourth consecutive week.
Nucor pushes HR spot price to $790/ton
Nucor increased its consumer spot price (CSP) for hot-rolled (HR) coil to $790 per short ton (st) on Monday, Feb. 10 – a $15/st bump vs. last week. The Charlotte, N.C.-based company has raised its weekly CSP by $40/st over the past three weeks after maintaining tags at $750/st since Nov. 12, according to SMU’s […]