Severstal North America sent a letter to customers Tuesday informing them of current base prices for non-contract orders.
The contents of the letter are as follows:
Recently, we have seen a series of corrections in the marketplace. As lead times approached the summer months and import activity temporarily increased, market pricing declined and buyers have slowed purchases to see where prices will settle. Market activity has also been affected by the aftermath of the tsunami in Japan, major tornadoes, floods and operating problems at some domestic producers.
Despite these short term events, underlying manufacturing demand in most markets continues to improve, and some markets, such as automotive, remain strong. Overall industrial production is recording solid gain and 80 percent of steel consuming markets in the US are growing. Appliance and container shipments are forecast to improve, railcar shipments are projected to be up 82 percent and agriculture and machinery will remain strong through year end. The labor market is gaining momentum and job creating now exceeds new entries into the labor force.
In the steel market, NAFTA light flat-rolled steel consumption is estimated to increase 6.5 percent in 2011 to nearly 70 million tons and inventories remain moderate and level. Raw material commodities have been relatively stable, and demand growth for the balance of 2011 and into 2012 is projected to exceed new steel capacity.
While we recognize the impact of short-term events, we also believe the outlook for the balance of the year is strong. Recognizing this, our transaction prices are as follows:
Hot Rolled Bands: $42.00 cwt. ($926/mt or $840/nt)
Cold Rolled: $47.00 cwt. ($1,036/mt or $940/nt)
Hot Dipped Galvanized: $47.00 cwt. ($1,036/mt or $940/nt)
Electro-Galvanized: $52.00 cwt. ($1,146/mt or $1,040/nt)
These prices are effective with new, non-contract orders May 23, 2011 and later, and Severstal's published price book extras will apply.
Comparatively, in the US domestic flat-rolled market, current flat-rolled spot prices are:
Hot rolled coil: $38.00-$40.00 cwt. ($838-$882/mt or $760-$800/nt)
Cold rolled coil: $44.00-$46.00 cwt. ($970-$1,014/mt or $880-$920/nt)
Hot dipped galvanized base: $44.00-$46.00 cwt. ($970-$1,014/mt or $880-$920/nt)