US long product steelmaker Commercial Metals Company (CMC) expects lower scrap costs and increased federal infrastructure spending during the summer construction season to widen its metal margins for the quarter ending 31 May.
Scrap costs for the Irving, Texas-based company rose by $33/short ton (st) to $379/st in the quarter ending 29 February compared with a year earlier. CMC's average steel selling price decreased by $80/st to $905/st during that period, bringing its metal margin down to $526/st from $639/st, according to the company's earnings report.
CMC, a major buyer of ferrous scrap to feed its electric arc furnaces, noted in today's earnings call that ferrous scrap costs fell significantly in March. The Argus #1 HMS delivered consumer national average fell by about $38/gross ton (gt) to $330/gt this month.
CMC said investment stemming from 2021's Infrastructure Investment and Jobs Act has begun boosting demand for reinforcing bar (rebar) in public works projects. It estimates that spending from that law will increase US rebar demand by 1.5mn st/yr for the duration of the program.
Data center construction is another area driving rebar demand, the long product steelmaker said. These buildings house computer systems that increasingly support the growing artificial intelligence sector. CMC estimates that planned data centers projects and those under construction represent 250,000-350,000st/yr of rebar consumption.
CMC executives were bullish that these factors will support construction activity for years. They noted that the company typically measures a 5-10pc increase in demand for its steel products associated with seasonal increases in construction from the quarter ending 29 February to the current quarter.
Its North America segment increased rebar and merchant bar shipments by 5pc to 694,000st in the quarter ending 29 February compared with a year earlier. In its European segment, steel shipments decreased by 37pc to 275,000st.
CMC reported an $86mn profit for the quarter, down from $180mn a year earlier. The company noted that costs associated with commissioning its Arizona 2 micro mill lowered net earnings by $17mn. That project became the world's first micro mill to roll merchant bar quality product in January, according to the company.
