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Broken Record - Steel Prices on the Rise

Tuesday, April 10, 2018

"Steel Prices are on the Rise!"......"Buy now or you will be paying more later this Spring"....   We hear this every year from fence manufacturers and distributors.  We rush to tie up our capital and buy material for the coming season only to find we could have bought it for the same price (or cheaper) in the coming months.  Manufacturers sell a lot of material in the Spring because of their price increase propaganda. Then in a couple of months their business slows down because most installers bought material for their big Spring and early Summer projects.  The manufacturers then panic because they are not making their monthly estimates so they lower prices or offer special deals to try and sell more material.  

But this year is different.  Domestic steel rod, the material that the wire for chain link fence is made, is up over 22% so far this year.  Pipe and tubing for fence framework is up over 20%.  We have seen import schedule 40 prices up over 40%.   Most steel manufacturers expect or have announced additional increases of up to 10% for May 1st.  If that wasn't enough, zinc has nearly double since the beginning of last year and freight rates have skyrocketed.  Each one of these items would take an article to partially explain the reasons for the increases, but I will give you the highlights.  

The main reason for the rise in pricing is the Trump administration's section 232 tariffs of 25% to import steel products and 10% to aluminum products.  This tarriff has sent price increase waves through out the market. This along with an improving economy has caused domestic steel mills to become very busy.  There are concerns over whether US steel mills will be able to keep up with the increased demand.  

But on the other hand, we are not sure how many countries will be exempt or partially exempt from the tariffs. This seems to be changing daily as we watch the negotiations in the news and on Twitter.  Even if more import are allowed into the country, it typically takes 4 months from order to arrival.  This means changes would not be seen until sometime this Fall.  

We recommend that you do not bid projects too far into the future or if you have to (school projects) add a steel escalation clause to your bid.  I do not believe there will be shortages on material this Summer, but you may have to wait longer than typical to get some materials.  The colder than normal Spring in the North has slowed things a little but once it warms up (if?) things should get busy.  Keep checking with your supplier to stay up on the latest news.

BP