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Some companies see steel prices stabilize

SURCHARGES, COSTS SHOWING A DECLINE; OTHERS REMAIN SKEPTICAL

PETALUMA – The cost of steel for construction as well as fabrication of stainless steel wine tanks and other equipment continues to climb, but there are mixed signals that the cost inflation may be slowing. Longtime steel distributor Van Bebber Bros. of Petaluma has been noting early indications of some price stabilization for certain types of steel, according to Royce Van Bebber. Mill prices for certain types of steel had increased as much as 50 percent in the first months of this year, compared with late last year. “It seems the steel market somewhat stabilized,” he said. After receiving notices of price increases from mills on a regular basis in the first and second quarters, Mr. Van Bebber has seen fewer such notices since May 30 for rectangular tube steel, since July 10 for plate steel used in building and bridge decking, since June 4 for expanded metal and since July 10 for channel stock. Mr. Van Bebber points out that raw material surcharges for commonly used stainless steel, types 304 and 316, have been falling, following a trend in scrap stainless steel prices. The surcharge was $1.66 a pound in May and is set to be $1.44 a pound in August, a savings of about $440 per ton. That’s off from the surcharge high point of $2.28 a pound in mid-2007 and compared with 48 cents a pound in January 2006. Meanwhile, the scrap stainless price has slipped from a peak of $1.75 a pound to 80 cents now. Rod Ferronato, president of wine tank powerhouse Santa Rosa Stainless Steel Fabricators, also is pleased to see the surcharge for stainless about a quarter a pound less than at the end of 2007 and decreasing at about 3 to 4 cents a month. “We were expecting it to be higher at this time,” he said about the surcharge. Bob Massaro, whose Napa-based Healthy Buildings USA company shifted purchasing of preframed light-gauge panels early this year to Rohnert Park manufacturer Codding Steel Frame Solutions, is noticing changes in charges. “We have two projects bidding now, and prices are coming down from prices quoted four months ago,” Mr. Massaro said. “We’re seeing a 10 percent to 12 percent drop in materials costs.” Codding Steel Frame Solutions project manager Roger Moore saw the big surcharge increases from mills in June and has heard rumblings of another in August, so he’s not as optimistic. “We’re told prices are not stabilizing,” he said. While the rate of increase in steel pricing for heavy construction is slowing, energy surcharges from mills are larger now than they were at the beginning of the year, according to John Cross, vice president of the American Institute for Steel Construction. “But there is still upward pressure on prices,” Mr. Cross said. Continuing global demand for scrap metal to melt down for steel is one reason Mr. Cross cites for the continued increase in prices. The largest global importer of scrap steel is Turkey’s growing steel production industry, rather than China, according to the steel construction institute. Another is high demand for finished mill projects.