ACHRNEWS

Steel Market Turmoil Expected To Continue

February 26, 2004
COLUMBUS, Ohio - Galvanized steel price volatility and shortages may continue for the next several quarters, according to distributor members of Heating, Airconditioning & Refrigeration Distributors International (HARDI).

The organization states that as commercial work is coming back, contractors are being hit by higher prices and even spot shortages. Price increases are also being encountered for prefabricated sheet metal, pipe, and fittings widely used in residential work. Distributor inventories partially cushioned the effect of rapidly rising prices by steel manufacturers, the organization said.

According to HARDI, there are many causes for the price increases, and they are generally not related to any aftereffects of steel tariffs that were imposed and then rescinded. One cause is the high demand for steel at a time when there are fewer producers due to mill consolidations. Other causes HARDI believes are contributing to the price increases include a coke shortage, increased transportation costs, and the growing Chinese economy, which has increased worldwide competition for raw materials, including scrap metal.

HARDI points out that to deal with price increases, contractors may want to work with suppliers to help determine material costs at time of delivery and prepare for a worst-case scenario approach on expected prices.

Publication date: 03/01/2004