German rebar benders struggle in brutally competitive market

The standstill in the German house-building market has distributors and benders of rebar battling for orders in a brutally competitive environment.

“Benders can hardly sell for a higher price than they paid to the mills,” a manager at a large distribution group tells Kallanish. He explains that companies the size of his need a margin of €150/tonne ($163). This includes obvious services like cutting and bending, and delivering, costs like transport and handling, but also for the scrap waste from cutting, which means lost value. “After all, I get less money per tonne from the scrap yard than I paid to the mill.”

Another buyer echoes the former manager’s complaints, but also indirectly blames him for making a bad game worse. According to that buyer, the big bender groups have recently come one step down, chasing for business that usually belongs to the smaller players.

“We are, ourselves, one of the bigger small players, but our upper limit for a job is 2,000 tonnes, and that’s where the big ones normally start,” he notes. Smaller local benders have a monthly tonnage of 700t, he explains, and very clearly accuses the big benders of ruining prices, as they have the financial cushions to help them survive.

Base prices for rebar have occasionally dropped below €370/t – or €635/t delivered – which brings mills to their pain threshold. However, the price deterioration downstream is worse. “Even if mills’ prices were €50 lower, we would still not break even,” the buyer complains.

For one month, his company tried to charge the price it would need to get away with minimal damage, and communicated this to its customers. “But it did not work; they would not place orders,” he concludes.

Christian Koehl Germany