Soaring Steel Prices: What can Door Dealers Expect?

Wilkerson: There are several well-publicized factors driving monthly increases from our steel suppliers: limited supply of imported steel, raw-material cost increases, scrap escalating to all-time highs, rising fuel and energy costs, value of the U.S. dollar, etc. All of these have created an opportunity for domestic mills to continue the price escalations. Although non-residential construction is down in this country, the limited availability of imported steel forces U.S. consumers to purchase from the domestic mills. As a result, their order books are full, and, as we all know, prices are driven by supply and demand.

How is this time different than or similar to what happened in 2004?
Boilini: We went through this four years ago when prices doubled in six months. Then they fell 50 percent. Nobody seems to think things are going to fall now because of the demand around the world. We’ll all be bracing for a long period of this. Business is good because people are trying to get ahead of these price increases. It’s not quite the same because the increases aren’t as dramatic and we’re not allocating steel yet. But it has thrown things in a tailspin.

Owens: There’s not a big difference. A lot of the supply in 2004 was going to China. What happened was, at the time, there was a shortage of steel. We’re hearing the rumblings of there’s possible allocations coming, but we haven’t seen that happen yet. In ’04, the prices were going up because there was a shortage of steel. Now it’s not necessarily because there’s a shortage, but with the dollar being so weak—in conjunction with the increase of all the material costs—they can sell it offshore for more money than they can sell it in the United States.