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  • Steel Pricing + Tariffs Question

    With the threat of tariffs, pricing for goods increases (even if no tariffs yet exist), solely because greedy hands will always try to get more profit. As a business owner, I'm not completely against this. However, I do disagree with sales tactics where one might use an excuse such as a threat of tariff to increases profit even though no true increase of cost yet exists. But that's a semi-separate discussion.

    Anyway...just wanted to see if everyone is seeing steel prices increase, and maybe to what extent (what percent increase is being felt throughout the industry, if any). Maybe Steve_hajewski would be best to answer as he's on the "inside". However, if anyone has an experience with recent quotes/purchases of steel...please share what you see going on with pricing!

  • #2
    We are having units built. Our contractor was kind enough to pre-purchase the goods to lock in the price. Said prices for our building would have increased by almost $100,000 if we would have waited. I would anticipate a slowdown in new buildings being build next year because they are going to get stupid expensive (at least the steel ones)

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    • #3
      As a supplier the prices that we pay for steel depend on what the markets for steel dictate. Steel prices skyrocketed rapidly this spring based on speculation long before the tariffs became law.

      I don't know of ANY supplier in our industry using foreign steel, but the situation impacts all users of steel, not just imported.

      Pricing a steel building is a bit tricky - we need to estimate to some extent what we expect markets will do so that we can hold pricing. No sales person wants to make that call to tell the client that their proposal has expired. But most buildings are ordered long before they ship. There is a time delay so that the building can be manufactured, and also most customers delay their shipments multiple times due to permit and site delays. If we estimate the prices too low, we could leave ourselves in a situation where we would lose money. If we price it too high we will lose the order to a competitor.

      As far as what is going on in the market, we are hopeful that the steel producers will open additional plants which and ease the current situation of record high steel costs. At the moment prices are as high as we've seen them, and at best have stopped rising. An additional pricing component that is affecting our market right now is shipping. The active economy and regulations limiting hours driven means that there are not enough trucks and truckers to go around. By the time a steel building is built, it has been shipped a few times - first as raw ore to the mill, then as coil stock from the mill to us, then as finished components to the job site. The increased trucking cost is felt every step of the way.

      The final element that we are all facing with the current low unemployment numbers is a shortage of laborers to assemble buildings. The crews that erect storage buildings are able to charge a premium during a construction boom such as we are seeing now.

      So, yes buildings are expensive right now and relief is not in sight. On the bright side, rental rates have also been going up in recent years. If you own an existing site, the increased cost of construction today may be restricting even more new supply from coming online in your community, and it is likely giving existing owners the room to raise their rates.

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      • #4
        Originally posted by letsgosonics View Post
        We are having units built. Our contractor was kind enough to pre-purchase the goods to lock in the price. Said prices for our building would have increased by almost $100,000 if we would have waited. I would anticipate a slowdown in new buildings being build next year because they are going to get stupid expensive (at least the steel ones)
        Would you mind sharing what the total cost of the building was, or what % of the total cost that $100,000 was (just to give a relative idea). $100,000 increase on a $100,000 building is HUGE, while a $100,000 increase on a $10,000,000 project is small.

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        • #5
          Originally posted by Steve_hajewski View Post
          As a supplier the prices that we pay for steel depend on what the markets for steel dictate. Steel prices skyrocketed rapidly this spring based on speculation long before the tariffs became law.

          I don't know of ANY supplier in our industry using foreign steel, but the situation impacts all users of steel, not just imported.

          Pricing a steel building is a bit tricky - we need to estimate to some extent what we expect markets will do so that we can hold pricing. No sales person wants to make that call to tell the client that their proposal has expired. But most buildings are ordered long before they ship. There is a time delay so that the building can be manufactured, and also most customers delay their shipments multiple times due to permit and site delays. If we estimate the prices too low, we could leave ourselves in a situation where we would lose money. If we price it too high we will lose the order to a competitor.

          As far as what is going on in the market, we are hopeful that the steel producers will open additional plants which and ease the current situation of record high steel costs. At the moment prices are as high as we've seen them, and at best have stopped rising. An additional pricing component that is affecting our market right now is shipping. The active economy and regulations limiting hours driven means that there are not enough trucks and truckers to go around. By the time a steel building is built, it has been shipped a few times - first as raw ore to the mill, then as coil stock from the mill to us, then as finished components to the job site. The increased trucking cost is felt every step of the way.

          The final element that we are all facing with the current low unemployment numbers is a shortage of laborers to assemble buildings. The crews that erect storage buildings are able to charge a premium during a construction boom such as we are seeing now.

          So, yes buildings are expensive right now and relief is not in sight. On the bright side, rental rates have also been going up in recent years. If you own an existing site, the increased cost of construction today may be restricting even more new supply from coming online in your community, and it is likely giving existing owners the room to raise their rates.
          Thanks for your insight Steve.

          Comment

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