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Nonresidential's strength reinforces rebar; the downtrodden housing market and uncertain economy are troublesome for rebar producers and distributors, though nonresidential construction's resilience and declining import penetration serve as counterweights going into 2008.

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THE AILING HOUSING MARKET has put a dent in demand for rebar, but positive trends in other end-use markets have provided some offsetting reinforcement. While demand is down this year from the record levels of 2006, strong nonresidential and infrastructure construction activity, and limited import penetration, combined to make it a solid 2007 for domestic bar mills.

The bigger question for the producers of concrete reinforcing bar is whether this strength will continue into 2008. Analysts and industry experts believe a lot depends on whether the U.S. economy continues to be strong and if rebar imports continue to stay low.

"Demand has been steady although a little down from last year," says D. Michael Parrish, executive vice president of bar and cold-finished steel for Nucor Corp., Charlotte, N.C. Nucor is one of the country's three major domestic suppliers of rebar, along with Gerdau Ameristeel and Commercial Metals Corp.

While the moribund residential market is responsible for some of that decline, homebuilding comprises only 3 to 5 percent of total rebar consumption, according to Christopher Plummer, managing director of Metal Strategies Inc., West Chester, Pa.

"Luckily our market isn't heavily affected by the residential construction market," says Bob Risser, president of the Concrete Reinforcing Steel Institute, Schaumberg, Ill. "We are less affected by housing than other segments of the construction market."

Yet even with such a small percentage of rebar going toward the residential market, the doldrums there contributed to a 7 percent downturn in demand for rebar in 2007 vs. 2006. Brian MacIntyre, a salesman for Re-Steel Supply Co. Inc., Eddystone, Pa., says the market for 20-foot rebar used for residential applications "is basically dead."

Total housing starts (including single family and multifamily construction) in October slumped to a seasonally adjusted annual rate of 1.229 million units, down 16.4 percent from a year earlier, according to U.S. Commerce Department statistics. The Washington-based National Association of Home Builders reports that November builder confidence in the market for new single-family homes, while unchanged from October, remains at its lowest point since the trade association started tracking it in January 1985. "While they continue to work down inventories of unsold homes and reposition themselves for the market's eventual recovery, they realize it will be some time before market conditions support an upswing in building activity--most likely the second half of 2008," says David Seiders, chief economist for the NAHB.

Some places, most notably California and coastal regions such as Florida, use masonry brick reinforced with rebar, but Matt Brace, senior vice president of marketing and sales for Commercial Metals Co., Irving, Texas, notes this represents a fraction of the rebar market. More widespread is its use in high-rise multifamily housing and condominiums--a market that has also been fairly weak.

Multifamily construction is expected to fall about...

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