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Brace for price increases!
Steel prices are escalating rapidly and material is in short supply. To understand why is complicated and involves supply and demand relationships that are complex. IN THE PAST WE RECEIVED MONTHLY PRICING from Ryerson and Viking Materials, our largest service center suppliers. NOW WE RECEIVE ONLY DAILY PRICING. Supply is tight, lead-times are long.
We convert flat sheet ferrous and non-ferrous materials into shaping the metal behind your brand. Atlas is a technical converter of steel, aluminum and stainless steel sheet. Let’s go upstream for a ride. Mills such as Nucor, Steel Dynamics, Inc, US Steel, ClevelandCliffs, and ArcelorMittal are some of the United States producers that produce coil products that are sold to service centers.. There are also many foreign producers with China overshadowing all other countries as well.
The pandemic hit the steel industry hard in the spring of 2020 and steel consumption dropped rapidly to near 50% capacity utilization. There were massive layoffs and shutdowns to reduce capacity. Now demand has resurfaced without sufficient supply. The mills have increased pricing and extended lead-times to the service centers.
Service centers convert steel coil material into sized flat blanks, which is what we purchase and convert into parts.
Bottom line is this, material pricing is escalating and while we do our absolute best to mitigate the material increase effects on your products, prices will ultimately need to reflect the base price increases we are experiencing.
SMU’s ( Steel market Update) survey of service center and OEM executives on Nov. 9-11 revealed an average benchmark price for hot-rolled steel of $710/ton, surpassing the $700/ton level where many had expected it to top out. That’s up 60% from a low of $440/ton in mid-August as the economy struggled with the coronavirus, and it exceeds the $580/ton in mid-March pre-COVID 19.
Since November, prices listed are actual purchases:
Date – HR $/ton
Dec 2 – $761
Dec 9 – $845
Dec 16 – $899
Dec 23 – $961
In summary, the upward slope of the steel prices is as much about the tight supplies as it is about the growing demand as the economy rebounds from the pandemic shutdowns. Mills idled significant capacity in the second quarter and have taken their time about bringing production back. By John Packard and Tim Triplett December 1, 2020 www.thefabricator.com.