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Auto demand for SBQ strong: Gerdau exec

Keywords: Tags  Gerdau Special Steel North America, Jack Finlayson, special bar quality steel, SBQ, steel demand, automotive, U.S. manufacturing, SBQ lead times Corinna Petry

CHICAGO — While some suppliers of special bar quality (SBQ) steel products say they’re seeing tepid demand from several end-use sectors, Gerdau Special Steel North America is experiencing strong business, according to its top executive.

"All three of our mills are booked to near capacity," president Jack Finlayson told AMM in an e-mail. "We are seeing robust demand from the markets that we serve, which are heavily weighted in transportation equipment, such as passenger cars, light trucks and commercial vehicles."

The automotive sector has been a notable exception in an overall environment of lukewarm demand, several suppliers have said (, Jan. 14). But the automotive industry’s comeback reflects the return of U.S. manufacturing in general, Finlayson said.

"We are now seeing more localization of formerly imported components, such as transmissions, engines and other parts," he said. "There are a number of reasons for this trend, but the primary driver is that the United States is now considered a low-cost manufacturing country."

Some SBQ segments aren’t quite as strong right now, including oil and gas and service centers, Finlayson said. "However, we expect to see growth in both sectors throughout the year," he added.

First, the United States is positioned to become a low-cost energy producer, which Jackson, Mich.-based Gerdau Special Steel NA, a division of Brazilian steelmaker Gerdau SA, said will drive more rig activity. Second, "we also expect to see more service center activity to support energy and general economic and industrial growth in 2013," Finlayson said.

Unlike in 2011 and through the first half of 2012, lead times from Gerdau’s three SBQ mills—Jackson; Monroe, Mich.; and Fort Smith, Ark.—have returned to more traditional levels. Consistency in deliveries is a goal for the steelmaker, he said.

"One of the reasons we are increasing our capacity at the Monroe, Mich., mill is to support our customers who require consistent lead times as we expect demand to continue increasing over the next five years," Finlayson said.

Gerdau has finished building a continuous caster at Monroe and will begin installing a vacuum degasser later this year. Work on Monroe’s existing bar rolling facilities will include the installation of six additional rolling mill stands and a walking beam reheat furnace.

By 2014, Gerdau also expects to have increased capacity on its straightening and quality inspection lines.

In addition, "we recently completed construction of a fifth quench and temper line at our downstream steel processing facility in Huntington, Ind.," Finlayson wrote in the e-mail. Up next is the installation of new equipment for steel bar turning and inspection, induction heat treating, straightening and cutting—all part of an overall $27-million investment at Huntington (, March 15).

The bar processing facility upgrades should be complete by the second quarter.

Gerdau competitors either declined to discuss their business, citing quiet periods before earnings season, or were unavailable for comment.

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