The demand for structural steel has been rapidly increasing, AISC says. With controlled order entry, rather than selling steel on a first-come, first-served basis that could allow a small number of buyers to corner the market on all available steel, customers purchase steel on the basis of how much they purchased in the past.
“We can talk to our customers and find out the real need versus the speculative or hedge-buying need,” explained Joe Stratman, general manager of Nucor-Yamato Steel Company in Blytheville, Ark., the nation’s largest producer of wide flange. Nucor-Yamato’s action comes as steel shipments are up as much as 25% compared with a year ago.
According to Stratman, as the market strengthened beginning late last year, rolling cycles began expanding. A rolling cycle is the time before the same size member is again produced by the same mill and varies between mills based on their product mix and equipment.
“As the cycles started expanding, people felt they needed to get out ahead of the market,” he said. “They’ll start buying further and further out. It originally grows by legitimate demand, but it expands by speculative buying.”
Nucor- Yamato’s response was to discuss needs with their customers and when required to limit purchases based on previous levels of demand from a specific customer. “Controlled order entry is a way to meet the real demands of the marketplace on a timely basis,” he explained.
“The controlled order entry process is expected to put us on a maximum 12-week cycle once it’s fully implemented.”
Reportedly, rolling cycles are currently extended two or more weeks beyond that at Nucor-Yamato.
Steel Dynamics, Inc., another major supplier of wide flange, is using a similar process, though SDI’s rolling cycles are still typically at six or eight weeks. “We open up rollings 12 weeks out,” said James Wroble, SDI’s sales and marketing manager in Columbia City, Ind. “What’s different about this year is that people want to book further and further out. A year ago there was a noticeable pick-up in business. We were booked a month out, then five or six weeks. And then 12 weeks. We decided we’re not going any further than that because our customers really can’t predict any further out.”
As with Nucor-Yamato, when there are more requests than a rolling can accommodate, purchases are based on a customer’s previous history. The situation is expected to ease drastically late next year when SDI brings another mill online with an anticipated capacity of 600,000 tons.
