Precast Inc. - September/October 2008 - (Page 10) PRECASTER’S PERSPECTIVE Reinforcing Steel Crisis – Part 1 Editor’s Note: “Precaster’s Perspective” offers a precast concrete manufacturer’s point of view on an issue of concern to the industry. Precast Inc. magazine welcomes reader comments on each topic. Responses to this issue’s topic of Steel Crisis Part 1 must be received by Nov. 24 for publication in the January-February 2009 issue. Please forward comments and/or suggestions for future topics to the editor at rhyink@precast.org. his article is Part 1 of a two-part series concerning the current reinforcing steel crisis. In Part 1, NPCA engineering consultant Sue McCraven interviews Bill Washabaugh Jr. and Bob Risser for their perspectives on the rising cost of steel and the effects of reinforcing steel shortages on the precast concrete industry. T Bill Washabaugh Jr. is vice president of Northern Concrete Pipe Inc., with facilities in Bay City and Charlotte, Mich. He is a longtime member of the National Precast Concrete Association and has served as an active member on its Concrete Pipe Product Committee. He is also the current chairman of the American Concrete Pipe Association. Washabaugh has more than 34 years of experience in the concrete industry, and Northern Concrete Pipe is celebrating 50 years of business in 2008. Part 2 of this series will appear in the next issue (November-December) of Precast Inc., in which representatives of a large and a small precast manufacturer offer their points of view on the current steel market. for concrete products. Construction remains very strong in many parts of the world, especially developing regions such as Asia and the Middle East. This demand, combined with the weak dollar, has driven up the cost of steel on the world market. Despite the recent increases, world prices for reinforcing steel still remain significantly higher than current U.S. prices. The U.S. domestic situation is simply a response to old-fashioned supply and demand. Why don’t U.S. recyclers buy up the scrap steel? Washabaugh: They can’t compete, price-wise. Because of the falling value of the dollar in relation to other currencies, foreign buyers like India are able to pay twice the price for recycled steel than prices offered by U.S. scrap iron dealers. After these foreign countries process the scrap into billets, they had been shipping it back to the U.S. to be made into reinforcing steel at enormously escalated prices. Since the devaluation of the U.S. dollar, there is no rod coming back into the U.S., I’m told. Unlike the U.S., some countries like Russia have stopped export of their scrap iron completely to ensure that important concrete construction projects will have necessary reinforcing steel for completion. Risser: Another component is the inequality of scrap availability on the world market, which further drives up prices. U.S. scrap – the largest source in the world – is available more or less on the open market. Many other countries impose stiff tariffs on exporting their country’s scrap or ban its export altogether. China recently raised its tariff on scrap export to 15 percent. Indonesia has an Can you explain why there is a steel crisis in this country? Washabaugh: The shortage of reinforcing steel and its escalating prices are the main topics anyone is talking about in the concrete products industry today. Most of us know that reinforcing steel is made from recycled, or scrap, steel, which is great in a “green” sense. The problem is that China, India and numerous smaller countries have been buying up all the scrap steel generated in the United States. Reinforcing steel prices have increased more than 60 percent just since January (2008) and have increased more than 100 percent since 2007. Because the concrete industry needs reinforcing steel – from mesh to bars – to make products like pipe, pavement and bridges, what’s happening in the scrap steel industry in this country is having huge repercussions for producers. Risser: The other component adding to the volatility is simply the increase in worldwide demand for all steel, including reinforcing steel Bob Risser, P.E., is president and CEO of the Concrete Reinforcing Steel Institute (CRSI), Schaumburg, Ill. CRSI represents companies actively engaged in producing, fabricating and placing reinforcing steel and industryrelated products as well as professionals engaged in the design and construction of steelreinforced concrete. 10 SEPTEMBER/OCTOBER 2008 | PRECAST INC.
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