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Source: American Metal Market
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Steel rebar purchasing co-op gaining traction

Mar 01, 2013 | 04:50 PM | Samuel Frizell

NEW YORK — A two-month-old steel purchasing cooperative for independent reinforcing bar fabricators is picking up speed, participants told AMM, with the handful of suppliers already on board reporting a pick-up in ordering activity from member rebar fabricators in what is traditionally a slow season for long products.

“We’ve gotten some business from people we had not done business with (before joining the co-op),” said Parker Arthur, sales manager at Steel Dynamics Inc.’s Roanoke Bar division, a supplier to the Independent Steel Alliance (ISA) co-op.

A source at another ISA supplier who declined to be named said his company has also seen an uptick in buying activity from member fabricators since joining the co-op, which was incorporated in May 2012 and officially launched Jan. 1 (amm.com, Jan. 23).

“What we’re seeing now is the member accounts where we’d get one out of four trucks, now we’re getting three out of four,” he said.

In addition to SDI, the ISA also lists among its approved steel suppliers Byer Steel Corp., Salit Specialty Rebar and BlueLinx Corp., among others who preferred not to be named, ISA president and founder Chris Casey told AMM. Casey declined to comment on whether other steel majors Nucor Corp., Gerdau Long Steel North America or Commercial Metals Co. had been contacted about joining the group since its formation at the start of the year.

The co-op—the first of its kind for rebar in the United States and Canada—works by linking up member fabricators, who make an initial equity investment in order to join, and member rebar suppliers. Casey projects the co-op will have 50 members within 24 months, but declined to comment on the number of members the group currently counts.

Suppliers benefit by getting access to new, independent customers, the ISA says, while fabricators benefit by receiving a financial incentive to buy from ISA-preferred suppliers in the form of a rebate, which is distributed to fabricators after they buy more than a certain tonnage threshold.

“(Fabricators) have the option of buying wherever they want, but because of our preferred-supplier status, which has a rebate attached to it, (we’re) more attractive to them,” Kevin Cornell, general manager at Salit Specialty Rebar, an ISA supplier member, told AMM.

At least one fabricator member confirmed its purchasing strategy had shifted as a result of joining the group.

“We have changed our buying patterns, we are moving our tonnage to the ISA vendors, and we’re just two months into the year,” said Burke Byer, president of Byer Steel, which is both a supplier and a fabricator of rebar.

But while some members say they’ve seen a shift since joining the fledgling group, others said the business changes have yet to be dramatic, particularly as they await an expected pick-up in activity in the spring when the construction market resumes after a winter lull.

“We’re kind of in that gray area between signing on and the bidding area, and seeing where this is going to go. It’s just a little early to tell,” said Cornell. “(But) we have great expectations and we think it’s going to be good for our business.”