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Steel price boom a bust for fabricators
- By Dan Davis
- February 22, 2008
The Steel Index reported that for the week of Feb. 11-17, the price of hot-rolled coil hit a 12-month high at around $700 per short ton. That"s almost $200 above the 12-month low.
Of course, this rankles many fabricators because they remember back in 2003 when prices were much more reasonable.
For example, hot-rolled sheet was selling for less than $300 per ton back then, and now its selling close to $600 per ton. Granted, those 2003 prices were below historic averages, but since then the prices have risen to historic highs. This is a history lesson no fabricator wants to sit through.
- So what"s causing this price jump?
- Steel exports aren"t making their way into the U.S. as often as they once did because demand is greater elsewhere. ArcelorMittal believes that 60 percent of the world demand for steel comes from developing economies. The Chinese market alone is four times larger than the U.S. steel-consuming market.
- Without steel exports to supplement their inventories, U.S. metal service centers have to pay the high prices demanded by domestic mills. That"s left the January steel inventory tonnage for U.S. metal service centers at levels near a shortage, according to steel market analyst Michelle Applebaum. We all know what happens when demand
outstrips supply. - The raw materials used to make steel have increased in prices like all other raw materials. That"s one of the main reasons that steelmakers are taking steps to own and, as a result, control their own raw material supply chains.
Industry experts don"t see any price relief in sight for the near term. Summer usually brings a relaxing of steel pricing, but the global economy has a way of making everyone rethink if and when the old rules apply to
today"s market.
On the bright side, the price of aluminum is expected to decrease. UBS analysts adjusted their 2088 price forecast for aluminum from $1.40 per pound to $1.24 per pound.
Unfortunately, a few cents fail to offset the large dollar increases for steel.
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The Fabricator is North America's leading magazine for the metal forming and fabricating industry. The magazine delivers the news, technical articles, and case histories that enable fabricators to do their jobs more efficiently. The Fabricator has served the industry since 1970.
start your free subscriptionAbout the Author
Dan Davis
2135 Point Blvd.
Elgin, IL 60123
815-227-8281
Dan Davis is editor-in-chief of The Fabricator, the industry's most widely circulated metal fabricating magazine, and its sister publications, The Tube & Pipe Journal and The Welder. He has been with the publications since April 2002.
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