Steel Update: A New Era Emerging

© 2004 Door & Access Systems
Publish Date: Fall 2004
Author: Tom Wadsworth
Page 32

Steel Update: A New Era Emerging

The year 2004 has been one of the most volatile years on record for steel costs. Price increases have hit everyone in the door and access systems industry, from steel suppliers to manufacturers to door dealers to consumers.

Will this volatility continue? For the latest update on the steel situation, we talked to three of the companies that supply steel to our industry: Bob Gifford, president of Interstate Steel, Joel Mazur, managing partner of The Techs, and Tommy Scruggs, pre-paint product manager for Steel Dynamics.

Is the current steel situation for the garage door industry better or worse than it was in January and February of this year?

Mazur: The right question might be, “Is the garage door market going to be adequately supplied throughout the balance of the year?” There is a new paradigm in the steel market. It’s no longer a matter of getting the best deal, but more a matter of getting lined up with the best reliable source.

Gifford: Steel is somewhat more available. But the price is certainly much higher because of base-price increases and surcharges on steel.

Do you expect steel costs for garage door manufacturers to go higher before the end of the year?

Scruggs: The market is still so volatile, it’s difficult to predict next month, much less 3-4 months out.

Mazur: I expect pricing to continue moving upward in response to input prices going up (scrap, iron ore, coke, freight, energy) and world demand being pretty strong. However, the movement will most likely be significantly calmer going forward.

Any other helpful perspectives?

Gifford: The pricing formula for each mill is slightly different. Some mills have increased their surcharges, while some have increased their base price. The surcharges are based on the price of scrap. If the price of scrap comes down, the surcharges should come down.

Scruggs: The market is not what it was six months ago, but I don’t know if we’ll ever again see the kind of markets we have seen in years past.

Mazur: We are in a new era where the industry is getting more consolidated and more disciplined. This implies a more healthy industry long term and one that should be able to supply the garage door market for years to come. Steel is still a very cost-effective product to use.