NEW YORK Five years after the recession pounded the steel industry, domestic concrete reinforcing bar demand is steadily improving as construction recovers, but the rebar market continues to battle narrow profit margins and capacity underutilization, Concrete Reinforcing Steel Institute (CRSI) president and chief executive officer Bob Risser told AMM.
"Things are loosening up a little in the bidding. Were kind of out of the woods and the independent fabricators are going to survive this," Risser said. "(But) Im almost universally hearing from people across the board, both big and small, the margins have not come along with that at all."
Rebar use increased 13 percent in 2012 from a year earlier according to a report CRSI is set to release at the end of April, and is expected to increase at least 7 percent in 2013, Risser said. But that hasnt meant the books are significantly better.
"The prices need to go up," said one mill source, who reported higher volumes month over month but slim profits. "Rebars just too cheap. I dont think anyones making any money."
"Business is picking up a little bit," a rebar service center source on the West Coast said. "But margins are not so good or so attractive. Were selling. And while its not what the company wants (to sell at), were still selling."
Apparent rebar consumption totaled 7.2 million tons last year, up from a low of less than 6 million tons in 2009, according to CRSIs report. At the peak of the pre-recession construction boom in 2006, however, rebar use reached more than 10 million tons.
"Our fabrication capacity is far ahead of current demand, even with the (consumption) increases that weve seen," Risser said.
In its most recent earnings report, Commercial Metals Co.s Americas Fabrication segment reported a 6.3-percent increase in rebar shipments in its fiscal second quarter compared with the same period a year earlier, but the unit still posted an adjusted operating loss of $3.8 million.
Risser said there are bright spots in 2013, however, as construction activity in the Northeast, Florida and California becomes more robust and rebar consumption increases.
"Were very optimistic about the future because of the pent-up demand and all the cash sitting in the corporate coffers," he said. "Were seeing condos in Florida again; were seeing that type of residential and commercial construction starting to come back."