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Rolling cycles driving bar mills’ buys

Keywords: Tags  rebar, merchant bar quality, rolling cycles, price increases, Gerdau Long Steel North America, bar inventories, steel long products, Samuel Frizell

NEW YORK — Relatively strong demand for reinforcing bar and merchant bar through the end of 2013 is driving new buying patterns at long product mills, with customers required to plan their purchases further in advance and buy more material off the mills’ rolling cycles.

Merchant bar quality and rebar inventories have fallen significantly, depending on region and size, since the third quarter of 2013, according to buyers and mills. This marks a change from previous years, as demand has improved and prices have increased.

"There’s less floor stock. They haven’t wanted to hold large inventories. I don’t see they have the desire to carry inventories," one rebar buyer said.

"Mills don’t have floor stock like they normally do," a second rebar buyer said.

Mills have had to carry significant floor stocks in recent years, with demand too tepid to consume enough of the material off the rolling cycles.

But the end of 2013 was surprisingly steady, and there were enough scattered outages and planned downtime at various mills to prop up sustained demand.

"We’re seeing people buying steel not at warm-temperature levels, but definitely more than your average December," one mill source said. "We’re seeing inventories shrink."

Several buyers said they have been unable to obtain certain sizes of merchant bar because floor stock has been sold out.

"The domestic mills are fully booked and you have to wait until the rolling," one buyer of rebar and merchant bar quality product said. "You ask, ‘Hey, I want something.’ And the mills say, ‘We’re sold out until the next rolling in February or March. You want to book for that rolling?’ As for anything on the ground, they only have weird sizes: 3- x 3- x ¼-inch angles, or they have leftovers."

Buyers reported having trouble ordering rebar from mills they didn’t conduct consistent business with, saying the mills now have the luxury of picking and choosing customers.

"(The mills) are saying, ‘We’re not a babysitter for your tons,’ " a third rebar buyer said. "They’re in a position where they can do it right now. They’re rewarding people that did heavier tons before, the people who have been with them for the long term vs. people who will only buy when the price is right."

Rebar and merchant bar prices have increased in line with improved demand and higher scrap prices (, Dec. 23). The price increases have been supported by the relative scarcity of material, sources said.

Announced price increases at the major mills have amounted to $40 per ton ($2 per hundredweight) on rebar and $40 per ton on merchant bar products since October.

"We’re also trying to reduce rolling cycles, which improves service to the customers, and at the same time allows us to reduce inventory," a spokeswoman for Tampa, Fla.-based Gerdau Long Steel North America said.

Some rebar and merchant bar buyers criticized the trend, however, saying it causes them to plan many months ahead for shipments.

"They said up front they wanted to move to getting stuff off the rollings," a fourth rebar buyer said. "It’s forced me to get on the rollings one and a half months before I get the bar, so I have less flexibility to negotiate big tons. It makes me have to carry a bigger inventory. It makes things higher."

The trend of selling off rolling cycles is likely to continue into 2014, with rebar and merchant bar mills expecting stronger demand.

"We’ll always have something on the ground, and there are very few times in the market when we’re strictly selling everything we can produce and selling it from the rollings," a second mill source said. "It’s usually short-lived when it happens, but we’re making some progress."

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