More Increases in Steel Costs?

© 2002 Door & Access Systems
Publish Date: Fall 2002
Author: Tom Wadsworth
Page 44

More Increases in Steel Costs?

As reported in our spring 2002 issue, this year is seeing dramatic increases in the cost of steel, affecting nearly everyone in the garage door business.

In that article, Joel Mazur, managing partner at The Techs of Pittsburgh, offered a "conservative" projection that steel costs could increase as much as $120 - $140 per ton. Mazur now reports that his projections were indeed conservative, as steel costs have risen more than $200 per ton.

The Remainder of 2002

For a projection on the remainder of 2002, we sought input from Mazur, Al Chiodo, vice president and part owner of Premier Resource Group, and Cynde Vidas, general manager for sheet sales at Weirton Steel in Weirton, W.Va.

All three believe that steel costs have stabilized for now, though "there is probably more room for a smaller increase in the fourth quarter," says Mazur.

Vidas feels that the new stability should remain "unless there is a major disruption to the marketplace due to a Chapter 7 (bankruptcy) filing or consolidation."

Chiodo agrees. "If another domestic mill does go Chapter 7, that could change the entire industry," he says. "That would take a lot of tons out of the marketplace."

"The key factor is availability," explains Vidas. "Simply put, it's a matter of economics 101, supply and demand."

The Outlook for 2003

All three steel experts feel that 2003 should be more stable than 2002. But Vidas cautions, "There should be a settling until the next disruption."

"It again depends on what happens with the mills," adds Chiodo. "If things stay as they are now, we will probably see some modest increases in 2003."

Mazur's crystal ball sees a similar picture. "There are still supply issues at hand which could make the pricing for 2003 show another volatile year," he notes, "although not as volatile as 2002."