Reinforcing Bar Shortages – Press Release
 Reinforcing steel (rebar) suppliers and manufacturers have now begun defaulting on their contracts with construction companies to deliver processed (cut and bent) rebar, due to the nation wide shortage of raw material available from the local steel mills.
As reported a few weeks ago, the lack of ability of the mills to supply rebar was largely due to the breakdown of ArcelorMittal’s mill in Newcastle as well as the closure of a non-profitable mill in Cape Town, CISCO. The backlog due to the breakdown has never been caught up and with CISCO not being there to supply about 25% of the market, as they used to, the situation has become critical.
The 3 mills currently supplying the market have placed all of their customers on allocation i.e. have limited the quantity each customer may receive, and are apparently at full production. The mills are generally not able to adhere to delivery dates, making it impossible for the companies that process the steel, prior to it being delivered to the construction sites, to adhere to construction programs and deadlines. This is likely to cause massive cost and time overruns for contractors and developers alike.
The South African Reinforced Concrete Engineers Association (SARCEA), to whom most of the rebar processing companies are associated, has reported that its members are all experiencing the same shortages nation wide. “There is very little that the Association’s members can do about this general shortage, barring importing steel bars from international mills, which requires a 2-3 month delivery period and extensive outlays of capital” says Rod Mountford, director of the Association. This is the choice faced by an industry which is reeling from the decline of work in the construction sector, struggling with low margins and is generally cash strapped. To make matters worse and in order to keep the cost overruns of imports to a minimum, it is necessary to import very large quantities, making it unaffordable for the smaller companies.
“Reinforcing bars are made in various diameters or thicknesses and each size is manufactured (rolled) at a set time in the month by each mill. In each reinforced element in a concrete structure, there is a combination of various sized bars required to complete that element. This means that should a processing company run out of any specific size, it has to wait for the next rolling (generally the next month) before it is able to continue installing bars on the construction site. This has resulted in rebar companies swapping bar sizes and assisting one another wherever possible in order to minimize delays but obviously there are cost and time consequences for this additional effort” explains Mountford.
It is uncertain when these shortages will end and some companies have entered into the process of importing steel but it may be a case of “too little, too late” in order to avoid costly delays and time overruns.
C.R. Mountford | Director SARCEA |
