Structural steel industry moves to ensure supply meets demand

CHICAGO—According to the American Institute of Steel Construction (AISC), rapidly increasing demand for structural steel has led some domestic suppliers to initiate a controlled order-entry process to ensure that customers have an adequate supply of steel for the projects they are working on. 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.

According to Joe Stratman, general manager of Nucor-Yamato Steel Company in Blytheville, Ark., 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." The controlled order-entry process is expected to put the mill on a maximum 12-week cycle once it’s fully implemented. The company’s action is similar to other mills and comes as steel shipments are up as much as 25 percent compared with a year ago.

Service centers currently sell approximately 70 percent of the structural steel used in buildings, and fabricators who buy primarily from service centers are reporting adequate availability.