The Nucor Sheet Mill Group said in a letter early Thursday that effective immediately, Nucor will no longer enter into any type of discounted index-based contracts, including "bucket" contracts.
Nucor said that "discounted index-based contracts have not demonstrated an equitable return for the commitments Nucor makes to our contract customers, such as: providing a longer-term price commitment, assurance of product availability, ongoing technical and administrative support, and strategic commitment to the mutual benefit of Nucor and our valued customers."
The letter went on to say that "Nucor will offer firm price/volume contracts up to six months in duration. The Nucor Sheet Mill Group will consider index-based contracts (without discount) only to meet competitive situations. Contracts will require an identified end user, specified volumes tolerances. Existing volume will be honored."
Nucor said that the changes are meant to provide a clearer distinction between spot and contract pricing.