November 2023 Volume 5

MATERIALS

SBQ: ‘A Delicate Balance Between Supply and Demand’ High-quality bar market expects orders to rev up once the auto strike winds down. By Tim Triplett

Suppliers of special-bar-quality steel (SBQ), and the forgers who use it to make auto parts, are hopeful for a surge in demand once the strike in Detroit is finally over. The prolonged work stoppage by the United Auto Workers seeking big increases in pay and benefits from Ford, GM and Stellantis was taking a toll on steel suppliers as of this writing in mid-October. The prevailing view in the SBQ market, however, is that orders will be deferred rather than lost entirely. “Everybody thinks that when we come out of this strike there will be a boomerang effect, especially on the bar side, because of the delicate balance between supply and demand,” said Mark Candy, executive vice president, commercial, for Eaton Steel Bar Co., Oak Park, Mich. Eaton stocks hot rolled and cold drawn carbon and alloy bar products from half-inch to 20-inches in diameter for a customer base of manufacturers, service centers and forgers. Candy was a panelist on a raw materials forum during FIA’s fall meeting Sept. 26 in Nashville. “We are expecting a bullwhip effect. As soon as this strike is over, customers are going to want a significant number of orders and in a timely manner,” agreed panelist Tim Spieth, national sales director for Charter Steel. Three weeks into the auto strike (as of early October), Charter Steel had felt little impact, said Spieth. “We have not seen much effect to date because many customers are rebuilding their inventories, replenishing the pipeline. But as this strike goes forward, it could affect us more and more.” Charter Steel produces SBQ rod and bar in coil ranging from 7/32-inch to 1-9/16 inches in diameter and SBQ bar in sizes from ¾-inch to 3-1/4 inches. Price Trends Diverge Bellwether flat rolled steel prices have been on the decline for the past six months. Customers often assume bar prices follow the same trajectory, but that is not necessarily the case. Especially now that SBQ is in relatively tight supply, the panelists explained. “We’re now in a period we have never seen before, where there is a delicate balance between supply and demand in the SBQ minimill size range—the auto heavy segment up to 4-inch—because of all the mills that have rationalized SBQ capacity, in addition to the many SBQ plant closures,” Candy said.

Most recent was the August announcement by Republic Steel USA that it was shuttering steelmaking operations at its mills in Canton, Ohio, and Lackawanna, N.Y. “The loss of Republic has put a bit of a wrinkle into the hot rolled SBQ market,” Candy noted, estimating that Republic’s exit takes an additional 12,000-24,000 tons per month from the market, though Republic historically was a much larger producer to the automotive sector. Other factors such as coil versus bar, size ranges, grade offerings, quality, part applications and customer approvals can affect both availability and lead times for SBQ products, he added. Republic’s move follows several similar closures over the past decade including Timken Steel’s Harrison Melt Shop (2021), Gerdau SS Jackson (2020), Gerdau LP St. Paul (2020), Hamilton Specialty Bar (2018), and ArcelorMittal/Inland East Chicago (2015). Some new capacity has been added to the market in the same timeframe, including a new SBQ rolling mill commissioned by Charter Steel in Cleveland; SBQ coil capacity added by Alton Steel; modernization of production equipment at Nucor’s Norfolk, Neb., mill; a new vacuum degasser at Nucor South Carolina; and a new SBQ bar mill under construction at FRISA Steel in Monterrey, Mexico (see related story page 54). But in net terms, SBQ production capacity in North America is down. Which puts the remaining bar mills in a stronger strategic position.

Alton Steel's 6-strand continuous caster produces a 7-by-7 inch square billet for its 14-inch rolling mill. (Photo courtesy Alton Steel)

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