Nucor Corp. announced it will raise steel-sheet prices by 8.6 percent next quarter because of higher raw-material costs and more demand in Asia, said Dan DiMicco, Nucor’s CEO.
``Most of the price increase is to cover costs,'' DiMicco said in an interview. The price of the scrap metal Nucor melts to make its steel rose 19 percent last quarter.
Rivals including U.S. Steel Corp. and AK Steel Holding Corp. will probably try to match Nucor's $30-a-ton price increase for sheet, the most common steel product used in cars and appliances, analysts said. U.S. steel companies have been able to raise some prices because of import tariffs, the dwindling number of competitors, and demand from overseas nations such as China.
``Across the industry, the next move in pricing is up,'' said Mark Parr, an analyst at McDonald Investments Inc.
The average price for steel sheet, Nucor's biggest product, was $349 a ton in the fourth-quarter. Prices will be flat this quarter and rise to about $379 a ton in the second, DiMicco said.
U.S. Steel, North America's biggest steelmaker, hasn't alerted customers to any price increase, though it's watching the market, said spokesman John Armstrong.
AK Steel, the largest U.S. supplier of steel to automakers, is aware of Nucor's price increase and is studying the situation, spokesman Alan McCoy said. About 80 percent of AK Steel's shipments are under long-term contracts with fixed prices. Nucor's shipments are more closely tied to market prices.
Nucor's shipments of steel sheet increased 30 percent in the fourth quarter to 1.54 million tons. Its average price for steel sheet was 35 percent higher than in the fourth quarter of 2001.
Company executives said on a conference call earlier this month that Nucor would raise prices on steel beams by $15 a ton, and on steel plates by $20 a ton, to cover the cost of energy and scrap metal. Charlotte-based Nucor told customers about the steel- sheet price increases yesterday, DiMicco said.
The average cost of scrap used by Nucor and rivals rose to $118 a ton in the fourth quarter from $99 a year earlier. Scrap prices will increase by $20 to $30 a ton in the first quarter, DiMicco said. Scrap steel makes up about 60 percent of Nucor's production costs.
U.S. tariffs imposed in March on some steel imports have helped support some price increases. More than 30 U.S. steel companies have filed for Chapter 11 bankruptcy protection since late 1997 because of cheaper imports and slumping demand. Complaints by the U.S. industry led to the tariffs.
While the tariffs ``might have been the catalyst for rising prices, production cutbacks in Japan and Europe'' are driving the price recovery for steel, Salomon Smith Barney Inc. analyst Michelle Applebaum said in a report.
Japan and Europe have reduced steel-making capacity by about 10 percent. That, and growing demand in China, are helping to boost sales from the U.S. into Asia this quarter, Applebaum said.
China's ``manufacturing sector is now taking off and the old state-owned facilities for steel making are old and just don't cut it,'' said Peter Morici, former chief economist of the International Trade Commission. ``They are moving up the ladder of development.''
Worldwide demand for steel is expected to rise 1.3 percent this year to 819 million tons, with the biggest gains in Asia and the former Soviet Union. Demand will be unchanged in the European Union and will decline 1 percent in North America, MEPS International Ltd., an England-based steel industry consultant said in an article on its Web site.
``Domestically there's been no uptick in demand,'' DiMicco said, ``It's mostly from China and Europe.'' Bloomberg NewsGet curated news on YOUR industry.
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