steel shortages

Caled my local supplier today to order up a batch of material for a recurring project. Material is 1 1/2"X1 1/2" X 1/8" angle iron. Quantity of 460 linear ft.
No stock, none in the area they could transfer in. I was told that it would be around 2 WEEKS before they would have any stock.
Anyone else seeing this trend in common sizes of steel? I know that prices have risen a bunch lately, but it was still available in stock.
Thanks,
Bill Marrs
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a couple local steel dealer told me that steel price has doubled since january of this year.
supposedly, China is buying up most of the scrap steel ...they are building some sort of dam....or who knows what they are really building ?
wrote:

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China is building the Three-Gorges dam which is to be completed in 2009 and is the largest hydro-electric project in the world. Also, the entire Chinese economy is in a real hot cycle right now and they are putting into effect controls to try and cool it off to prevent over-inflation. Billh

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My understanding is that China's steel consumption is up 10% in the last year, and they now are consuming ~30% of the worlds steel supply, with resultant runups in the the price of steel parts -- automobiles/trucks excepted due to long term delivery contracts at fixed prices, but steel for building construction... hot rolled shapes, conduit/EMT, ductwork, metal studs, etc. are way up w/ an inflationary effect on total construction cost compared to a year (or even 6 months) ago.
#1 scrap iron is way up since the middle, even end, of last year.
I expect, secondarily, increased energy/crude prices do not help matters either.

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acrobat-ants wrote:

There are a number of factors at work in the current metal markets, but most of them lead to the basic economics of supply and demand.
Currently there is a world wide "recovery" from the economic doldrums of the past few years. China "the sleep giant" has awakened and its economy is growing at an unprecedented rate of about 9% per year. The demand for metals for both domestic consumption and for their export market is staggering. The North America is coming out of its slump and the and industrial consumption of metals is growing rapidly. At present, most of Asia, the EU and NA are all seeing the industrial output increasing rapidly leading to increased demand for metals.
In the past few years, there has been a contraction in the steel industry in the US. There have been bankruptcies and consolidations that have lead to lower capacity to meet the lower demands of the stagnant economy. Over the past 25 years or so, most of the new capacity for steel making in the US has been in the form of electric furnaces or "mini mills" as opposed to the integrated mills of the past. (Mini Mills use only scrap as opposed to iron ore in the integrated mills). This too, has lead to a much higher demand to for scrap.
The supply of scrap to feed the mills is lower that it has been in the past. Much of the best scrap feed stock used to be the scrap produced at factories,i.e.: flashing from forgings, borings, turnings, drop offs from shearing, scrap from stampers,etc. but with much of the domestic heavy industry either moving their production off shore or because their orders have been down the past few years, this supply of scrap is historically low.
So when you have a high demand and short supply you will always see prices rise. Then throw in some additional factors like the high cost of energy, the low value of the local currency (a weak USD) and spot shortages of raw materials (coke, nickel, scrap steel), producers will take advantage of the situation.
Given the dynamics of the current steel market, many users are stocking up to make sure that they have enough produce to carry them through the storage period. It is much like being at your local grocery store as a severe snow storm or hurricane is blowing into town. Everyone is stocking up on milk and bread to get them through the "disaster about to happen", but there stock piling is only making things worse.
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[snip]
Thanks for that very insightful post, Greg.
Jeff Danztler
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My local Home Depot has a sign near the electrical conduits saying they were limiting sales to 100 pieces per customer due to a steel storage. I don't use much conduit, but I still couldn't believe my eyes.

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4130N for the home aircraft builders is in short supply too. At first, it was the major manufacturer going bankrupt, and now its "going to china". I'm not sure what the true story is. Lots of rumors!
John
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A concrete contractor, a customer, told me a roll of wire, $36 last year is $80 this year.
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As everyone else has commented, I have heard to be true. China is buying up lots of steel. However, with the skyrocketing prices of fuel, who knows for sure how long the shortage will last. E.I. If China buys up the supply of steel, prices of steel go up. If the price of fuel goes up, they will not be able to import as much, and supply will go back up and prices go down until it is affordable for them to buy again.
Vicious circle of economics, as usual.
Scott

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wrote:

I remember this being in the news over here a few weeks ago. Industrially speaking, China are really ready to rock and roll in a big way, like they have been for some time.
http://news.bbc.co.uk/1/hi/business/3566761.stm
garryb
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I made a nightstand recently that I could have bought for less (wouldn't have been as nice though!) I'm really having to decide if a project i decide to do is worth doing based on material costs. If it's a paying job, it's not a problem, but if it's being fashioned for myself, it's another story. Maybe I should sell all my metalworking stuff and take up knitting! my luck, the world would experience a yarn shortage like never before! :) walt ps. Bad news: i cant afford to drive my big heavy duty truck because of gas prices, Good news: It's worth more now because of rising scrap prices! see, everything works out even! <G>
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It's an amazing world that we live in. It seems only a short time ago, we were swimming in a glut of steel so immense we would all drown in it. The U.S. and Europe were fighting to keep their overcapacity alive at any cost. Quality scrap was dumpstered and landfilled, not worth bothering to recycle it... Now if I could only get that crystal ball working for me...-Jitney
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I read an article on CNN or BBC news a month ago about a steel mining/milling town in Wisconson that had shut down years ago, the Japs bought the mines and mill and now have everyone working. Go figure!
--
Paul Calman, Hathaway Pines, California



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This is copy of post 03-11-2004 08:32 AM from http://www.hobartwelders.com/mboard
Steels New Structural Issues: China, Raw Materials, and Rising Demand
Industries Steel
Subscribe to Perspectives, our weekly newsletter.
by John Anton Global steel prices are exploding, with additional increases on the horizon. The recent gains are attributed to rising raw material costs. Input costs have steadily risen, and in some cases availability is limited. The cyclical increases will abate late in 2004, but structural changes are also occurring that will cause a permanent upward shift in the price of steel inputs.
The biggest problem currently facing the North American steel industry is the availability of coke, a converted form of coal used in traditional steel-making furnaces. The recent shortage is due to a fire at a U.S. mine that produces coal suitable for conversion to coke; once the mine is reopened, the shortage should fade. U.S. steel makers have historically imported coke to counter any short-term deficiencies. But Chinalong one of the worlds most important exporters of cokenow consumes its supply domestically, leaving little coke for export.
Another cyclical issue is the high price of scrap steel. Steel is the most recycled of all materials, with an entire class of newer steel companies depending on scrap as their primary input. Scrap prices are twice as high as they were at the same time in 2003. Global Insight expects scrap costs to retreat by mid-2004, but remain well above recent levels. The cyclical disruptions will pass, but a longer-term structural evolution will persista shift that promises higher input costs is a long-term reality. Several factors are responsible:
The dollar was extremely strong for the five years prior to 2002, and it will probably weaken further over the following decade.
The United States used to be the worlds dominant market for steel, but China now unquestionably owns that distinction.
Most importantly, global steel production has increased 25% in five years, but raw materials capacity has not kept pace.
Worse, the ability to expand capacity may be limited. China has dominated much of worlds increases in steel production, as Chinese output rose more than 7% per year from 1990 through 2000 and then exploded more than 20% annually over 200103. China now uses its coke domestically, and is importing scrap, ore, and other raw materials. Its surging demand means that less is available for other nations.
The first problem comes with ore. Deposits in much of North America have been mined out, such as those near Pittsburgh and Birmingham. The deposits near Lake Superior still have ore, but the extraction costs are rising. This means the highest quality ore is generally exhausted, thus forcing a lower quality to be substituted. Major deposits remain in Brazil and Australia, capable of supplying the world for years to come, and ore producers are investing to expand production in these regions, which will alleviate the existing market shortages. The question that remains is how quickly can this additional capacity be added? And, once these deposits are used up, the world will have to find new sources for oreat some point, this will become a problem.
Scrap supplies are also tight. Over the long term, scrap growth cannot exceed the rate at which ore is converted to steel. There is room for temporary expansion through more intense scrapping of obsolete cars and factories, but it is not practical to dismantle an entire industrial base to sell as scrap metal. And while scrap expansion is limited, demand has increased dramatically. As long as scrap is cheap, electric furnace recycling has a lower cost per ton for steel than does converting ore using a blast furnace. But, as more electric mills are built, demand rises and the cost of scrap is pushed up.
Global Insight expects that the current spike in steel prices will abate, but not approach earlier troughs encountered in the late 1990s. This pattern will continue into the future. Cyclical peaks and troughs will continue to plague the industry, but each peak will be higher than before and each trough not as severe as before. The longer-term fundamental scarcity of key raw materials will place upward pressure on input costs and producers margins. This will no doubt force another wave of industry consolidations over the next decade. Global demand for steel will continue to expand, but the availability of raw materials will grow just modestly. As a result, prices will continue to rise, and the availability of steel will be a limiting factor on global economic growth.
This article was sent to me by one of my customers. It's just FY I.
__________________ Respectfully, Mike Sherman Shermans Welding
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