As you well know, this has been a tumultuous year in regard to the fluctuations in raw material costs, primarily rebar.
Barnsco Texas takes tremendous pride in the partnerships we have with our valued customers. And it’s our goal to provide the products and support you need to plan and complete your projects in the most cost-effective and efficient manner.
To achieve this goal, we work tirelessly to provide competitive quotes, protect your pricing on steel and share market information that positions our partnership to grow based on accuracy and trust.
We rely on data from economists, steel mills, importers, scrap and what is transpiring globally to determine the direct impact on material cost. The following is a summation of what is driving rebar prices in our region:
- The Section 232 bill that has tariffs on all imported steel has the countries we purchase rebar from raising their prices in order to export to the U.S. The cost of imports today is equal (in most cases) with the cost of domestic steel. Importers are reluctant to invest in steel that takes six weeks (on average) to reach the U.S. ports. As we’ve seen, the price fluctuates so much that the risk is not worth taking. In the past two months, there has been on average 42k tons of rebar imported. Imports from the same period last year were 192k tons. Import bar is scarce!
- Domestic rebar has increased YOY from May by 34% and since January 1, 2018 by 22%. The U.S. mills are currently running at 75% utilization, which has them producing as much rebar as they can while investing in their operations to increase utilization to 80%. With the demand exceeding the supply, prices have risen. (Note: this data was attained from the three mills that supply the North Texas market.)
- Transportation costs have played a part in the increases. With the new “electronic log” rule in effect, drivers are 30% less productive, and finding CDL drivers is becoming more difficult daily. The uptick in crude oil cost, along with the increased oil field activity in the Permian and Eagle Ford Shale Basin, has many drivers and transportation companies focusing in these areas.
We expect rebar prices to be fairly stable the remainder of the year, although the tariffs pose an upside risk to our outlook.
We limit the exposure of price fluctuation for our customers by “protecting” you when we’re awarded a job within the terms of the quote. We calculate where steel prices will be during your project and arrive at a number that we will stand on until you have completed the job.