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Steel rebar mills dig in heels on prices

Keywords: Tags  rebar, reinforcing bar, construction, Architecture Billings Index, Nucor Corp., Gerdau Long Steel North America, mills, buyers fabricators

NEW YORK — Rebar mills have dug in their heels to counter a two-month slide in prices, with volumes starting to improve from previously lackluster levels and construction projects slowly moving off the ground.

Rebar prices retreated in April and May from a February high of about $690 per ton ($34.50 per hundredweight) but appear to have struck bottom this month at around $645 per ton ($32.25 per cwt), with prices varying based on region and order size.

Margins at the mills have been thin even as volumes have shown relative improvement, so mills have held prices firm. Charlotte, N.C.-based Nucor Corp. and Tampa, Fla.-based Gerdau Long Steel North America both announced earlier this month they were holding prices flat (, June 6), and other mills have followed suit.

"I think everyone’s doing a good job at saying, ‘We’re not going to drop our price,’" one mill source said.

Rebar fabricators have seen orders and projects pick up, but their margins have been thin as well.

"We kicked into high gear in early March. We’ve been working lots of overtime," a source at one Midwest rebar fabricator said. But business "is still not great," he added. "Margins aren’t as good as they could be."

Buyers have long been hesitant about keeping stock on their floors, buying in small quantities since the financial crisis struck the steel market in 2009. Improving volumes have yet to lead to more buyer confidence, sources said.

Rebar buyers expect short lead times and buy in small quantities to fill orders. "People are counting on a short lead time and being able to get it from inventory. They want their material in a hurry," a second mill source said. "Nobody wants to buy it in advance. Nobody wants to take possession of it until they need it."

Without any major legislation funding infrastructure development, rebar producers are selling into smaller projects. Sources said a widely expected increase in nonresidential construction (, Feb. 5) has largely not yet arrived, with contracts for restaurants, malls and stores not at pre-recession levels.

The Architecture Billings Index (ABI), which reflects architecture firms’ construction plans, dipped below 50 in April to 48.6, indicating a contraction in construction spending, although the index bounced back to 52.9 in May.

"The rebar market is just ho-hum right now," the first mill source said. "It’s just not that impressive."

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