Steel in transition
Published 5:07 pm Monday, March 22, 2004
By By Arthur McLean Editor
Local industries and area farmers are beginning to feel the pinch of Chinese steel consumption in the form of higher prices.
Since last year, the price of flat rolled steel, the most common type of steel, has doubled. In just the past three months, the price has increased nearly 40 percent. Scrap metal prices have more than tripled in the past two years.
Massive amounts of steel demand from China has helped raise the price of steel, and some steel interests say China is not playing fairly by giving government subsidies. Rising gas and oil prices are also partly to blame for the price increases.
Local industries are feeling the increase in prices, but so far, they have reported no adverse affects yet due to the increase in steel prices.
At EscoFab, a steel fabrication job shop in Atmore, Calvin Schrock, the president of the company, said he has seen the price of materials his company needs increased by 40 percent over the past several months. Some specialty products, like stainless steel, have doubled within the past three months.
"We're trying to keep up with the prices, right now," Schrock said.
For now, the increase hasn't hurt business at EscoFab, but Schrock, and purchasing agent Ellis Beachy say continued high steel prices could hurt business in the future.
"It makes it hard to quote prices, because they may only be good for two or three days," Beachy said. "Right now, we're probably losing some of our smaller farmers and walk up customers."
The most direct effect, Beachy said, is the amount of paperwork involved in keeping up with rapidly changing prices, and the scarcity of more specialized products.
For one specialty steel product, Beachy said he was forced into an extended search to quote a job. "Out of four suppliers, only one had it, and it might be gone if you can't get a purchase order in quickly enough."
Schrock said the current market conditions are a far cry from the stable market prices of the past 15 years.
Beachy and Schrock are concerned that their industrial customers might hold off on some projects and purchases towards the end of the year if steel prices remain at these elevated levels. "These prices will probably max out some people's budgets by the end of the year," Beachy said.
Area farmers, who are usually a mix of agriculture experts and homebrewed engineers, have expressed concern over steel prices at EscoFab.
"The farmers are gearing up for the new year, and some are not happy with the prices," Schrock said. "They say, I bought this I-beam for this much last year." But Schrock said the company has had to pass on higher materials costs to its customers.
In addition to its local customers, EscoFab is also building kiln dryer parts and cotton gin parts for major industrial customers, including a distributor in Ohio.