Rebounding Economy Impacting Steel Prices Regardless of Increased Capacity

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Gavin Steel Fabrication takes note of increasing steel prices in spite of increased supply and capacity. Earnest & Young's 2014 report on the steel industry gives insight into why prices continue to rise in spite of heightened capacity and iron ore availability.

Gavin Steel Fabrication supplied all miscellaneous steel products throughout stadium.

Gavin Steel Project, SBC Center - supplied miscellaneous steel through project

The same steel we use for metal decking is used by the auto industry, appliance manufactures and even barbeque pit manufacturers amongst other industries. We are now pushing an estimated 50 cents per pound, an increase of about 20% in only one year.”

Over the past 7 years we have seen the recession cause steel prices to drop considerably. Now that the economy is rebounding demand for steel is on the increase, impacting all steel related industries. Raul Morales, president of Gavin Steel Fabrication(parent company to Helotes Trailers and We’ll Deck You, a Vulcraft Metal Decking supplier out of San Antonio, TX) says, “Last year we were paying an estimated 40 cents per pound for steel; with the rebound of the economy we have seen demand for steel raise as related industries begin to pick up pace. The same steel we use for metal decking is used by the auto industry, appliance manufactures and even barbeque pit manufacturers amongst other industries. We are now pushing an estimated 50 cents per pound, an increase of about 20% in only one year.”

According to Ernest and Young’s 2014 report on the steel industry, the capacity of steel production in the US is an important factor in steel prices potentially dropping; however, being that production capacity is a factor that is ‘controlled’ I believe that steel producers will find a way to allow increased demand for steel to continue to push steel prices up. As stated in the Earnest and Young’s report, “Excess Capacity is the Largest Threat to the Sector” (pg. 1). As a result, producers will continue to charge the highest possible price the consumer is willing to pay regardless of increased production capacity. Small steel fabrication companies like, our own, Gavin Steel, Inc. and their sister company, We’ll Deck You, will continue to see steel prices rise regardless of the increased capacity of steel production due to the control mechanisms of this sector.

As the auto industry continues to rebound and new commercial developments continue to be built the demand for steel fabrication will continue to rise and the cost of steel sheets and coils will continue to increase causing prices to rise; thus, allowing capacity control to be used as a tool for steel producers to maximize profit per unit of product.

Samuel Morales
Samuel.r.morales(at)gmail(dot)com

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samuel morales
gavin steel
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