(Bloomberg) -- Nucor Corp., the largest U.S. steelmaker, raised prices for a fifth time since late October, adding to signs of a rebound in the industry as the world’s top producer ArcelorMittal and Russia’s NLMK also announced increases.
The cost for new orders of hot-rolled, cold-rolled and galvanized sheet will increase by at least $40 a short ton, effective immediately, Nucor said in a letter to clients Wednesday. Arcelor and NLMK lifted U.S. prices on some products by the same amount, with NLMK telling customers the boost was “due to extending lead times and strong order placement.”
U.S. Midwest domestic hot-rolled coil steel index futures have rebounded 19% from a three-year low in November as economic sentiment mends and the U.S. housing market strengthens. Declining mortgage rates are making homes more affordable, boosting demand for steel used in construction, Commercial Metals Co. Chief Executive Office Barbara Smith said in an interview Monday.
Nucor’s price increase is “a positive for steel sector sentiment,” Jefferies LLC analysts including Martin Englert and Alan Spence said in an emailed note. “The move will be broadly supported by peers.”
“We are not surprised” to see a mill that uses ferrous scrap to make products lead the charge, said Cowen & Co. analyst Tyler Kenyon. Prices of ferrous scrap are expected to settle higher this month from December, while “positive supply-side sentiment” from U.S. Steel Corp.’s idling of its Great Lakes facility and an unplanned outage at Arcelor’s Indiana Harbor East complex may also help, according to Kenyon.
A phase-one trade deal between the U.S. and China in December also makes long-term prospects for steel-using industry “brighter,” said David Owen, Economist at IHS Markit.
Luxembourg-based Arcelor told clients Wednesday that prices of all new orders of flat-steel products will increase by at least $40 a ton, effective immediately.
NLMK said base prices of all products would be hiked by at least $40 a ton for all new spot orders, effective immediately.
Nucor and ArcelorMittal didn’t immediately respond to an email seeking comment, while NLMK didn’t immediate reply to a voice mail seeking comment.
The last time prices of the metal have risen this fast was after steel tariffs were imposed by President Donald Trump in March 2018, with no formal announcements made by steel mills, according to Kenyon.
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