US long steelmaker CMC expects higher demand for reinforcing bar to be able to absorb increased steelmaking capacity coming online this year.
The Texas-based rebar and merchant bar producer is ramping up a 500,000 short ton (st)/yr micro steel mill in Arizona and plans to start up a similar size West Virginia rebar mill by the end of 2025.
CMC competitors Hybar and Nucor also plan to start up rebar mills this year, and Pacific Steel is building a mill in California that could begin making rebar in 2027.
But demand, CMC said in its quarterly earnings call today, will keep pace with the added long steelmaking capacity.
"We look at the combination of infrastructure, the non-residential construction spend [and] the residential construction spend," CMC chief executive Peter Matt said. "We believe you're going to see across those end markets substantial demand. So, yes, it's an additional capacity. We think it's absorbable."
CMC credited US president Donald Trump's trade policies for potentially enticing multinational companies to make sizeable investments in the US and for driving demand for rebar in the construction sector.
The company also cited strong demand for long steel from data centers and the liquefied natural gas sectors.
In the quarter ending 28 February, CMC shipped 503,000st of rebar, up by 9pc from the same period a year earlier.
CMC's steel selling price was $814/st in the quarter, and its scrap cost was $338/st. The resulting $476/st metal margin was 10pc narrower than a year earlier. CMC expects steel prices to outpace gains in scrap costs when construction season begins in the spring and summer months.
CMC's new Arizona micro mill failed to break even financially in the quarter, the company said on today's earnings call. That mill is still ramping up and faced two transformer outages that held back production. CMC expects that electric arc furnace to begin turning a profit next year.
CMC reported a $25.5mn profit in the quarter ending 28 February, down from $85.8mn in the same quarter a year earlier.
