Nucor Lifts Steel-Sheet Prices Amid Recent Rise in Demand

Nucor Corp. raised prices on its steel-sheet products by $40 a ton, effective immediately, as rising demand gives the steelmaker room to pass on rising raw-material costs to customers.

Similarly, Weirton Steel Corp. added a $25 a ton surcharge to all its products beginning Dec. 15 and lasting until Jan. 31, 2004, also citing scrap prices.

The moves come as signs of an improved economic outlook accompany rising costs to produce steel. Scrap steel prices have risen this year as growing economies seek greater supply. Nucor, which operates electricity-fired furnaces called minimills, and similar companies rely on scrap steel as a major raw material.

But signs of growing demand and an improving economy give steelmakers greater power to pass on price increases to customers, said Michelle Applebaum, an independent steel analyst based in Highland Park, Ill. "If you go back and look at spread between steel prices and scrap prices, generally [profit] margins rise as steelmakers pass on scrap-cost increases to their customers, and then some," she said.

Dan DiMicco, chief executive of Nucor, of Charlotte, N.C., cited increased ordering activity. "The U.S. economy is picking up. We have a long way to go before we can say it's full-blown, sustainable growth, but the signs are more positive than they have been," he said.

Nucor's increase puts the price of a ton of hot-rolled sheet at $380, said Ms. Applebaum. The price increase affects all unconfirmed orders and isn't applicable to contractual business.

Nucor shares fell last week after McDonald Investments cut its rating on the company to "hold" from "buy," in part because of concerns the company wouldn't be able to pass on raw-materials costs to customers.