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Rebar shipments rise, but outlook still dour

Keywords: Tags  rebar, Gerdau Long Steel North America, Nucor, rebar buyer, rebar mill, rebar fabricator, rebar prices, Jim Kerkvliet James Darsey

NEW YORK — The rebar market is still crawling out of the recession, and rebar buyers and mills continue to express doubt about long-term demand despite a recent uptick in shipments ahead of the winter freeze.

The construction markets remain off-kilter and below pre-recession highs. While buying has increased in recent weeks, the uptick appears to be seasonal rather than cyclical.

"It’s October. ... Everyone wants to get their stuff in before the snow flies and people are trying to clean up projects—they can’t wait around for a price decrease," one rebar fabricator in the northern Midwest said. "We’ve been pretty busy."

But domestic rebar tags have been stagnant for months, with buyers paying around $645 per ton ($32.25 per hundredweight) f.o.b. mill since June. Aside from a few reported orders at lower prices, mills haven’t shown significant signs of lowering prices despite a slight shift down in shredded automotive scrap over the past few months.

With scrap prices in the Midwest settling up slightly this month (, Oct. 10), gains in Mexican rebar tags and limited buys of Turkish rebar, the mills might angle to lift prices, sources said.

"There’s been other ways to effectively increase pricing other than base price; (the mills are) raising different freight surcharge costs and rail costs, and they’re saying it costs more to get to certain areas. You’re seeing different games being played," a rebar buyer in the Midwest said.

Some rebar buyers said a price increase could help get the market moving again.

"I see things very flat, and I’m hoping things will change. I know the mills all want transaction prices to go up. I’m not totally against that. At the end of the day, it’s proven: over time you usually make more money in a volatile market with price structure going up," a rebar buyer in the Northeast said.

But there isn’t much optimism that the temporary order uptick reflects strong cyclical improvement. Rebar consumption is still far below pre-recession levels of around 10 million tons in 2006, and consumption this year isn’t expected to be much different from 2012 levels of around 7 million tons.

Speaking at the U.S. International Trade Commission (ITC) hearing Sept. 25 on rebar imports from Turkey and Mexico, Jim Kerkvliet, vice president of commercial sales at Gerdau Long Steel North America, expressed uncertainty that U.S. rebar demand would ever return to pre-recession levels.

"Industry estimates forecast that nonresidential construction demand will not return to pre-recession levels until 2019, and I’m not sure that rebar demand will ever recover to the prior level of 9 million tons," he said.

"Neither the construction market nor the rebar market has recovered from the beating we took in 2009," Nucor Corp. executive vice president James Darsey said at the hearing. "Construction demand remains well below 2006 levels and U.S. rebar production in 2012 was almost 20 percent below 2007 levels. Although there have been modest improvements over the past year or so, recovery remains elusive."

An East Coast rebar fabricator agreed. "The market in our area has gotten a little better because of the volume of work, but better than what? ... It was awful and now it’s better than awful."

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