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Construction data up but steel sales mixed

Keywords: Tags  Construction, steel long products, wire rod, rebar, Associated General Contractors of America

NEW YORK — Key construction industry metrics, including spending, have shown marked improvement in recent months, but whether the steel long products sector has seen the benefit in its order books is another question.

Most sources supplying the sector said business was improving and order books appeared stronger month on month, but many said dramatic changes have yet to arrive, even as spring activity starts to set in.

"We’ve seen an uptick, but not (as much as we hope) we will," said an Illinois-based rebar distributor who supplies contractors. States that begin public construction projects in mid-April are getting ready for more activity, but business might remain subdued until then, he said. "I think about a week before (our) April 15 opening, we’ll see projects getting off the ground," he said.

A rebar mill source agreed that the expected seasonal boost to construction demand had yet to materialize.

"We haven’t seen the spring bump," the mill source said. "Our volumes are trickling along (but) we haven’t seen any sustenance for (further) price increases at this point. We’re getting what we’re getting and it’s chugging along, but it’s not what I would call a feeding frenzy."

Several rebar mills reported selling higher volumes in March, especially after a $25-per-ton increase in the rebar list price announced in mid-March for April 1 shipments appeared to bring some would-be buyers in off the sidelines. The uptick, however, was not universal, and many players in the sector say they are still holding out for more noticeable improvement in construction activity as April takes hold.

"It’s just been a wet, cold winter, so a lot of work is being pushed back. A lot of people expect things to pop up here when the ground thaws," a second mill source said. "I was looking at a couple of job sites, but they have to wait for the ground to thaw."

But while many steelmakers say demand hasn’t been much to write home about, the data suggests things are, in fact, on the mend. For example, total seasonally adjusted construction spending in February totaled $885.13 billion, up 7.9 percent from February 2012 levels, led by a 19.2-percent year-on-year spike in residential construction spending, U.S. Census Bureau data show.

"There is little doubt that construction of new houses and apartments will continue to boom in the next several months," Associated General Contractors of America (AGC) chief economist Ken Simonson said in a statement.

At the same time, nonresidential construction spending was up 2.6 percent year over year in February, marking a slower—but still welcome—return for the recently lagging sector.

"There’s also been an improvement in some of the steel-intensive nonresidential sectors, such as power and manufacturing construction," Simonson told AMM.

And after a slow start to the year on the construction front, any uptick is a good uptick, steel producers and distributors maintained.

"The first couple of months have really been impacted by weather. ... We’ve been inundated," said a South Carolina-based wire fabricator. "(But) we’re optimistic that all the indicators, even non-res(idential construction), are picking up."

"People are ready to pop the champagne corks, but it hasn’t translated yet," said the first rebar mill source added.

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