NEW YORK Domestic steel mills have held reinforcing bar prices flat for most customers over the past several months in the face of disappointing demand, with producers and fabricators in most regions chasing too few orders with too many tons.
"Its a rough market right now. The overall capacity for rebar producers is about 60 percent. These are tough days," a mill source said.
A combination of wet weather in many parts of the United States and an overall sluggish economy has depressed shipment levels, with construction contractors slowing down their work in the rain and many fabricators left wondering when large-tonnage jobs will return.
"A 700-ton job would be a big job, and there are very few of them around. I can only think of one that is going on (in my area)," said a source at a rebar fabricator in Missouri. "The overall construction market in St. Louis has come back a little, but not as fast as people would like it to."
Overall shipment levels have been mediocre this summer, and demand so far this year has improved only slightly over last year, market participants said. Rebar consumption of 3.6 million tons in the first six months of this year increased 2.3 percent from the same period last year, according to data from the Steel Manufacturers Association.
August has been mostly slow so far. Independent fabricators said that the few 1,000-ton projects availablethe traditional bread and butter of the rebar businessare mostly being won by mills downstream fabrication segments.
Meanwhile, selling prices for finished fabricated rebar have plummeted over the past year, fabricators said. Demand has varied by region, however, and certain markets have seen poorer margins than others.
"Its hit and miss ... certain areas have been gangbusters," a rebar distributor source said. Many areas with higher activity, like the South and Southeast, have seen lower margins. "If I had to live on my margins in Texas or (Nebraska), Id be bitching, screaming and crying the blues. Id be lucky to have a gumball to chew on," he said.
Although rebar mills have kept their prices firm at around $645 per ton ($32.25 per hundredweight), rebar buyers said that with such thin margins on finished fabricated rebar, they were ready to pressure their mill suppliers for a price break. Most said they had not seen a decrease in mill selling prices, but there were rumors circulating that indicated some softening.
"I know they lowered some pricing to some guys in southern California. I dont know if hes buying a lot or why," said a source at a rebar fabricator in California. "One of the mills dropped him 50 cents (per cwt)."
"If you had 500 tons, I think theyd work with you a little bit," a source at a rebar fabricator in Ohio said. "They have been adamant up until now, but I think they theyre starting to hurt."
Mill sources, however, said margins also were too thin at the mill level to allow any dealmaking. One mill source pointed to a steady decline in selling prices over the past year, saying there was little room for him to drop his prices.
"Price decreases since July (2012) have lost us probably $90 to $100 per ton in selling prices. Thats not one item: thats on average. That just gutted it, and were seeing the effects of that. Were concerned with that trend and were trying to figure out a way to deal with it," a second mill source said.