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Rebar co-op aims to recruit top producers

NEW YORK — The Independent Steel Alliance (ISA), a rebar buying co-op composed of independent fabricators, is aiming to recruit at least one of the top three domestic rebar producers as it increases its shipment volumes and adds members.

“Our goal is to have a relationship with at least one of the big three but not all of them,” ISA executive director Chris Casey told AMM. The three largest domestic rebar producers are Nucor Corp., Gerdau Long Steel North America and Commercial Metals Co.

Members of the co-op, which leverages significant tonnage purchases from affiliated suppliers in order to obtain a rebate, have bought thousands of tons of rebar since the ISA’s formation at the beginning of the year. The group has recruited big-name producers, including Steel Dynamics Inc. and Monterrey, Mexico-based Deacero SA de CV.

“We were approached by them and we evaluated the membership and we felt that we could attain our long-term strategic objectives without joining the ISA,” a spokesman for Gerdau said.

Nucor and CMC declined to comment.

Several supplier sources told AMM they had seen increased business from members since the co-op was formed.

ISA members make an initial financial investment and then are rewarded with a rebate for buying tonnages from ISA suppliers. Some members will generate a positive return on their initial investment this year, Casey said.

ISA fabricator members bought 780,000 tons of rebar over the last year, Casey said, representing about 10 percent of domestic rebar consumption. Nucor supplied 32 percent of members’ purchases, Gerdau supplied 30 percent and CMC supplied 7 percent, according to Casey, adding that independent fabricators account for about 47 percent of domestic rebar purchases.

Members have changed their purchasing patterns to target ISA suppliers in order to achieve a rebate, suppliers and buyers told AMM, with rebar producers saying as early as March that they had received additional business (amm.com, March 1).

Casey said that only one of the largest domestic rebar producers could join the group if it were to function properly.
 
“Whoever gets on board first will have the greatest opportunity to win and not get left behind,” Casey said. “The sooner, the better.”

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