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Rebar price hikes hold despite uncertainty

Keywords: Tags  Reinforcing bar, rebar, steel, long products, merchant products, angles, channels, flats fiscal cliff


CHICAGO — Announced price hikes for concrete reinforcing bar and merchant angles, channels and flats have largely stuck as mills have held the line on tags, even as political uncertainty in the United States leaves some buyers jittery.

While some brushed off concerns about the budget showdown in Washington as overblown, they nonetheless conceded that the political drama had stoked concerns that could see projects delayed and buyers more reluctant to place orders.

"People have to plan for the worst-case scenario. It’s just human nature," one structural steel buyer said.

A construction industry source agreed that the fiscal cliff theatrics were slowing business. "Someone needs to take a few Republicans, a few Democrats, get a few beers and settle this thing so the rest of us can get on with business," he said.

But as the political gridlock in Washington continues, some market players describe business as brisk, especially in Texas, thanks to a healthy state economy, and the Dakotas, where the Bakken shale has driven demand for everything from housing to service industries. The health-care sector also was described as strong, with sources saying some hospitals were looking to push through expansions or new building projects in advance of anticipated new federal regulations.

But others said that business had remained unchanged in recent months or even dropped off over the fall. They suggested that a 2013 on par with this year might be as good as could be expected, given a U.S. economy that may be treading water at best or even slowing.

On the raw materials front, most sources welcomed an anticipated sideways move in scrap prices (amm.com, Dec. 4) in a year that has been marked by month-to-month price volatility. "For 20 years, (prices) wouldn’t move more than $30 over 12 months. You could almost hang your hat on it. Then you go back to 2008, and it moved $410 in six months. How do you make a plan with that going on?" another rebar fabricator said, echoing the sentiment of rebar consumers.

Still, one mill source said that his company had little choice but to boost prices in November, given higher scrap costs. "(The increase) is holding. It even drove a little demand. People got off the fence and ordered some tons to get ahead of it," he said.

Most domestic mills announced price increases of $35 per ton ($1.75 per hundredweight) for rebar, merchant bar and structural products in mid-November (amm.com, Nov. 12), effective early December in most cases, lifting AMM’s price for Grade 6, No. 5 rebar to $680 per ton ($34 per cwt), although sources put tags at between $660 and $700 per ton ($33 to $35 per cwt), depending in part on factors such as order size.

While some market players argued that the increases were not holding entirely, even at the mill level, most agreed that mills have been disciplined about the latest round of increases. Discounting is largely coming from distributors who bought before the increase went into effect and who can therefore raise prices less than the mill-announced increase and still make a profit.

Some market players predicted that rebar tags would remain unchanged in the near term, given unusually warm weather in some parts of the country, which increases scrap flow. But they also speculated that prices could rise going into the first quarter as the outlook becomes clearer and colder weather kicks in.


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