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
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.
floor stock. They havent wanted to hold large
inventories. I dont see they have the desire to carry
inventories," one rebar buyer said.
"Mills dont have
floor stock like they normally do," a second rebar buyer
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.
people buying steel not at warm-temperature levels, but
definitely more than your average December," one mill source
said. "Were 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,
Were 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 didnt
conduct consistent business with, saying the mills now
have the luxury of picking and choosing customers.
"(The mills) are
saying, Were not a babysitter for your
tons, " a third rebar buyer said. "Theyre in
a position where they can do it right now. Theyre
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 (
amm.com, Dec. 23). The price increases have been
supported by the relative scarcity of material, sources
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.
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
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. "Its 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.
have something on the ground, and there are very few times in
the market when were strictly selling everything we can
produce and selling it from the rollings," a second mill source
said. "Its usually short-lived when it happens, but
were making some progress."